Aus & NZ: Pacific Hydro considers batteries, pumped hydro

14 May 2018 - 12:00 am UTC

Renewables developer Pacific Hydro is looking closely at adding batteries to its generators and acquiring sites around Australia where it could build pumped hydro plants alongside renewable generators.

“We’re looking at storage options in any way, shape or form,” chief executive, Michael Fuge told Inframation on the sidelines of the Energy Week conference in Melbourne on Thursday (10 May).

“We’re looking at pumped storage, we’re looking at batteries and we’re looking at whether we just contract. In the short term we don’t see an issue. In the medium to long term – the five to ten-year space – we’re looking at pumped storage and batteries and how we get experience on that.”

The State Power Investment Corporation-owned company has several small operating hydro and wind plants in Australia, Chile and Brazil and numerous larger wind and solar farms in development.

Changes in Australia’s national energy policy as well as emerging network constraints are placing pressure on developers to co-locate storage with their projects or contract for some form of storage or “firming” capacity within the state in which their generators are located. This can also include signing contracts for gas-fired power plants.

The Australian energy market operator in late March said it would need to enforce more severe restrictions on generators to reduce output in some locations where there are too many projects connected to weak transmission infrastructure. This has direct implications for project revenue and is likely to have an impact on the financing of projects.

“We can see sites now where the local network company might say: well the network’s unstable at the moment you have to shut down. So suddenly we have a powerful business case for a localised battery,” Fuge added.

Fuge said it is unlikely they would build pumped hydro in the short term, but sites with good wind or solar resources near to locations with good potential to install pumped hydro are now among the most valuable.

“You can see pumped storage in a mine site close to a wind site being incredibly attractive.”

However, he pointed out the federal government’s Snowy 2.0 project to add 2GW of pumped hydro to the 4GW Snowy Hydro scheme would alleviate some of the pressure to build storage projects. It would also make “dispatchable” power a lot cheaper he said.

“If the government builds Snowy 2.0 – and effectively puts a AUD 2bn to 4bn [USD 1.5bn to 3bn] subsidy on the industry for dispatchable power – then dispatchable power will become very cheap and as a result the industry will be reshaped,” Fuge said.

Several energy gentailers – including AGL, ERM Power and Snowy Hydro – with access to “dispatchable” power such as coal, gas or hydro are also now launching financial hedging products for the owners of renewable generation. Buying these will allow renewable generators to still fulfill reliability obligations under the proposed National Energy Guarantee when there is no sun or wind.

The new Energy Security Board is expected to finalise the NEG by August, with legislation then enacted in each state and territory.

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