First pumped hydro energy operation in South Australia to be backed by $40m of federal funds
Lower prices and improved reliability will flow from pumped hydro generation of electricity, Energy Minister Angus Taylor says. He’s backing the claim with a $40m carrot.
Three projects in the Upper Spencer Gulf will compete for $40 million in federal funding to accelerate South Australia’s first pumped hydro operation.
The energy storage projects will be assessed on which can provide the most impact on reducing prices and improving reliability in the electricity grid.
Energy and Emissions Reduction Minister Angus Taylor will announce the grant program on Wednesday during a visit to the region.
“Storage and back-up power is our highest priority in SA,” Mr Taylor said.
“This will provide both.
“The beauty of pumped hydro is that it complements the flood of renewable energy.
“You can store energy when its cheap and use it when power is expensive — and in the process reduce prices on average.”
The three projects had already been identified on a shortlist of 12 nationwide being considered for the government’s Underwriting New Generation Investments program.
They are:
- Simec Energy’s $380 million Middleback Ranges project, south of Whyalla.
- Altura’s $350 million Goat Hill site at Cultana, near Port Augusta, being developed with Delta Electricity and Sunset Power.
- Rise Renewables and UPC\AC Renewables’ $700 million pumped hydro and solar plan at the Baroota Reservoir in the Southern Flinders, near Port Germein.
Mr Taylor said the Australian Renewable Energy Agency would assess the projects.
Federal Liberal MP for Grey Rowan Ramsey welcomed the grant program.
“It is imperative we firm up our electricity by either putting in extensive new dispatchable generation or by storage in some kind of battery,” he said.
“In this case, pumped-hydro appears to be by far the cheapest and best option and have a number of good sites we can marry up with our abundant, if sometimes spasmodic renewable energy sources.”
Mr Taylor said pumped hydro served a different purpose than batteries such as the Hornsdale Power Reserve in Jamestown.
Batteries provide split second stabilisation control while pumped hydro would provide hours of operation and complement gas-fired power when wind or solar were low.
The winning hydro project will no longer be eligible for the underwriting scheme but all three projects may still be in the running for the State Government’s $50 million Grid-Scale Storage Fund which was announced last November.
The State Government is finalising results of the fund and working with ARENA for further support.
The projects already secured funds from the previous State Government with $4.7 million awarded to Goat Hill, $3 million to Baroota and $500,000 to Middleback Ranges.
UPC\AC Renewables chief executive Anton Rohner said work on the Baroota project could begin before the end of the year.
The Baroota reservoir was taken out of the SA Water network in the 1990s. An upper reservoir, about 240m higher, would be built in the hills behind Baroota.
UPC\AC Renewables Energy announced yesterday it has taken a controlling stake in Rise Renewables, which had led the project so far, including receiving development approval in February.
“We will now focus on an accelerated timeline to financial close,” Mr Rohner said.
UPC\AC Energy is a joint venture which will provide access to capital from Philippines-listed Ayala.
“Baroota will need a bit of work to bring it up to standard and we’ll need to reinforce it,” Mr Rohner said.
He expects the project to take about three years with a construction workforce peaking at about 100 with five ongoing jobs created once the facility is running.
The Middleback Ranges project is part of industrialist Sanjeev Gupta’s planned investments in renewables, alongside a big battery and solar farm.
Goat Hill received development approval in May last year.
The Federal Government has committed to reducing average wholesale prices in the National Electricity Market to less than $70/MWh by the end of 2021.