Origin mulls $230m Shoalhaven hydro boost
Origin Energy is studying a possible $235m expansion of its Shoalhaven pumped hydro project.
Origin Energy is studying a possible $235 million expansion of its Shoalhaven pumped hydro project to boost national electricity market reliability, and company profitability, as east coast solar and wind power capacity jumps in the next three years.
Origin CEO Frank Calabria said a capacity doubling of Shoalhaven, which was acquired from the NSW government in 2013 with the big Eraring coal station in the Hunter Valley, to 475MW looked feasible and that construction could start late this year.
“We think this is actually one of the more economic expansions you can do, given the existing infrastructure,” Mr Calabria said yesterday at Shoalhaven’s Kangaroo Valley power station, the biggest of Shoalhaven’s two plants. “Increasingly, you are going to want the ability to have generation to be able to start reasonably quickly and run quite flexibly” as wind and solar become more prevalent.
Origin expects combined east coast wind and solar capacity to increase from 8000MW this year to 11,000MW in 2020, highlighting the growing need for readily despatchable energy sources such as pumped hydro when the wind is not blowing or the sun is not shining.
Pumped hydro projects operate like batteries by releasing water for power use when it is needed or prices are high, and then using off-peak power to recharge by pumping water back up to the reservoir for when it is next needed.
The Shoalhaven project, whose pumps can send 21 tonnes of water a second up its pipes, was rarely used and given little value when it was acquired as part of the $660m Eraring package that Origin bought from NSW.
But after Origin boosted its start-up reliability from 70 per cent to more than 99 per cent it is now being used daily, during peak times, and being refilled at night using off-peak, mainly coal-fired, grid power. The plant can produce for 28 hours at a time, in comparison to standard large-scale batteries, which last up to an hour.
When Origin had a closer look at company growth options about a year ago, it found the NSW government had built Shoalhaven with plans for future expansion. This means there is already space and connection points for an extra pipeline and easily expandable transmission infrastructure.
The original plans were for a 160MW expansion of pumping power at Kangaroo Valley but Origin is now considering a 235MW underground pump.
Pumped hydro developments generally cost about $1m per megawatt, meaning the existing infrastructure should bring a Shoalhaven expansion below $235m.
An expanded project, if a planned feasibility study is successful, would count on growth in renewables providing cheaper power during daylight hours.
Origin is in discussion with the Australian Renewable Energy Agency to help fund a $5m feasibility study on the expansion.
If that is successful, construction could start late this year or early next year and would take about three years, meaning the project could be running by 2021 or 2022.
Origin energy supply and operations chief Greg Jarvis said early studies show the 235MW expansion looks promising, but things like progress on the National Energy Guarantee will be important.
“We need to have more clarity around the NEG but we are very hopeful about where the NEG’s been taken with (Energy Security Board chair) Kerry Schott and her team — policy settings are critical for this industry,” Mr Jarvis said.
“The economics of renewables just keep on getting cheaper. They are very efficient but we need to look at the reliability of things and this is where Shoalhaven comes into its own.”