Solar is below $35/MWh and wind below $50/MWh

Eight hour big battery trumps pumped hydro in NSW long duration storage tender

https://reneweconomy.com.au/eight-hour-big-battery-trumps-pumped-hydro-in-nsw-lo
ng-duration-storage-tender/

A proposed big battery with eight hours storage has emerged as a surprise winner in the NSW state government’s first long duration storage tender, beating out pumped hydro projects that had been expected by some to emerge as a dominant force.

The 50MW, eight hour battery battery will be built at Limondale by German energy giant RWE, next to an existing solar farm also owned by the company.

The result is stunning for two reasons. Firstly, it will be the first eight hour battery to be built in Australia, and one of the first in the world. All big batteries in Australia till now have had one or two hours storage, mostly because they were focused on grid and frequency services, which requires only a fast and short response.

The Limondale BESS, located near Balranald in the south-west renewable energy zone, will be a lithium-ion battery project with a continuous discharge capacity of at least 8 hours, and will be designed to time shift the output of wind and solar and fill in gaps in supply.

The second stunning aspect of the battery win is what it might mean for the future of pumped hydro storage projects in Australia – a technology that was considered a shoe-in by some in the energy sector for the country’s long duration storage needs.

There are at least half a dozen major pumped hydro projects proposed in NSW, including by energy majors AGL, EnergyAustralia and Alinta, but – assuming they pitched for this tender – none was able to match the RWE battery proposal on the key criteria of value for money for consumers.

It is thought that pumped hydro is being challenged by big jumps in capital costs, and the risk of project delays. They may, however, get support from the new Labor government’s newly formed Energy Security Corporation, although the details of that have not yet been released.

Genex is currently building the country’s first privately owned pumped hydro facility at the old Kidston gold mine in Queensland, but its funding needs are being almost entirely met by government agencies, while the huge Snowy 2.0 project is running way over budget, and way over time.

The auction for long duration storage was part of the country’s biggest ever auction for large scale renewables and storage, and the first conducted by NSW as it plots it transition from coal to renewables.

It also coincided with the release of the generation auction results, which saw prices below $35/MWh for solar and below $50/MWh for wind. See our story: NSW gets stunning low price for wind and solar in biggest renewables auction

The announcement comes just three days after AGL closed the last unit at the country’s oldest coal generator, Liddell, for the last time, and ahead of the anticipated closure of the country’s biggest coal generator, Eraring, in late 2025.

NSW had been seeking up to 600MW of long duration storage, but it is understood that AEMO Services – which is managing the tender – has until around 2025 to fill that capacity. So there could be another opportunity for pumped hydro, or more eight hour batteries.

Another tender for renewable generation and storage is expected to be kicked off later in May. There is also an existing tender for up to 380MW or short duration firmed capacity – at least two hours – that is also designed to help replace the capacity lost with the closure of Eraring.

That auction is expected to be dominated by either big battery projects, or demand management, which is being invited to compete in a tender of this scale for the first time.

RenewEconomy reached out to RWE for further details of the Limondale battery storage facility, and was informed a statement would be issued later on Monday.

From one year ago-

Snowy 2.0

"The nation-building vision was for a big battery to be added to the Snowy Mountains Hydro-Electric Scheme. It was to be completed in four years (that is, by last year) at a cost of $2 billion without any taxpayer subsidy, bring down electricity prices, generate renewable energy and incur minimal environmental impact on Kosciuszko National Park.

Inspiring stuff. But not one of these grand claims has turned out to be true. Worse, Australian taxpayers and NSW electricity consumers will be up for billions of dollars in subsidies and increased electricity costs, all while Kosciuszko is trashed. Let’s have a quick recap.

Snowy Hydro now expects completion in 10 years, not four,* by 2026. Some experts consider even this extended timeframe to be optimistic. Construction of the tunnels is running at least six months behind the latest schedule and the transmission connection is unlikely to be built by 2026 anyway. The all-up cost has increased at least five-fold, to $10 billion-plus, as energy experts warned the Prime Minister and the then NSW premier in 2020.

The underground power station and tunnels alone will cost more than $6 billion, and Snowy Hydro avoids mentioning the transmission connections to Sydney – $4 billion-plus for HumeLink and the Sydney ring – and to Victoria. To make matters worse, Snowy Hydro refuses to contribute to these transmission works, leaving it to electricity consumers to pick up the tab. Transmission tariffs in NSW will increase by more than 50 per cent if the NSW government allows Snowy Hydro to get its way, based on analysis in a Victoria

It’s been around for decades but pumped hydro power is gaining attention as a potential back up for renewable energy, which is increasing its share of the electricity grid. It’s also technology the federal government is interested in.

Despite the assurance that taxpayer subsidies were not required, the federal government was forced to shore up Snowy 2.0’s business case with a $1.4bn “equity injection”. Further taxpayer funding is inevitable, warned Standard & Poors when it downgraded Snowy Hydro’s credit rating in 2020.

Far from bringing electricity prices down, Snowy Hydro’s own modelling predicts that prices will rise because of Snowy 2.0.

As far as the claim that Snowy 2.0 will add 2000 megawatts of renewable energy to the National Electricity Market, Snowy 2.0 is not a conventional hydro station generating renewable energy. It is no different to any other battery, and as such it will be a net load on the NEM. For every 100 units of electricity purchased from the NEM to pump water uphill, only 75 units are returned when the water flows back down through the turbine generators. Not only is the electricity generated not renewable, Snowy 2.0 will be the most inefficient battery on the NEM, losing 25 per cent of energy cycled.

And on the final claim of minimal environmental impact to Kosciuszko National Park, vast areas have already been cleared, blasted, reshaped and compacted. Hundreds of kilometres of roads and tracks are being constructed, twenty million tonnes of excavated spoil will be dumped (astoundingly, mainly in Snowy Hydro’s reservoirs), and noxious fish will be transferred throughout the Snowy Mountains and the headwaters of the Murrumbidgee, Murray and Snowy Rivers, devastating native fish and trout. The NSW government has even agreed to issue exemptions to its own legislation to override the prohibition of such pest fish transfers – an astonishing precedent.

The massive cost and environmental impacts of Snowy 2.0 cannot be justified for providing occasional longer-term storage."

https://www.smh.com.au/national/five-years-on-snowy-2-0-emerges-as-a-10-billion-...

Updated - "Snowy Hydro has advised that its troubled Snowy 2.0 pumped hydro storage project in NSW will overrun its already-revised $5.9 billion budget and may not be fully online until the end of the decade.

The latest delay, of as much as two years, looks set to intensify worries about the reliability of the east coast electricity grid as owners of coal power stations accelerate closure plans.

The federal government-owned company said it is working to “reset” the timetable and budget for the project with key contractor Future Generation Joint Venture, controlled by Italy’s Webuild....

One of the huge tunnel boring machines used at the project, a 2000-tonne machine named Florence, has been essentially stuck for months in soft ground, while a “depression” has appeared on the surface, 30 metres above where it is located. Work is under way to stabilise the ground to allow the machine to resume tunnelling."

https://www.afr.com/companies/energy/snowy-2-0-faces-further-cost-increases-dela... (paywalled)