Pushing water uphill for later use makes sense if you can do it cheaply and pull the trigger to generate when electricity prices are high. That’s the logic of pumped hydro, but the projects are big and take many years to build.

In Sydney in February the Pumped Hydro Energy Storage Conference included a panel chaired by ANU Centre for Sustainable Energy Systems director Professor Andrew Blakers on how these enormous batteries might shape the future of the NEM.

The transition to clean energy is going to be rapid, says Hydro Tasmania future energy market strategist Dr Cameron Potter, and there are still lots of things that need to be done.

“We need to be aware that power is a public good, and as soon as you start playing around with a public good we know politicians will get interested,” Potter says. “We need to be really careful to make sure that whatever we do stays reliable and stays cost-effective.”

Pumped hydro … it’ll happen: (from left) Andrew Blakers of ANU, Ali Asghar of BloombergNEF, Cameron Potter from Hydro Tasmania and Mark Williamson of the Clean Energy Regulator.

Industry participants will need to weigh the risks of feeling the need to change the system quickly with the possibility of political interference. That’s why it’s good to see curiosity around pumped hydro, he says, as the industry thinks ahead and “gets its plans in place”.

The biggest question is: how to provide flexible generation? Interconnection will take too long, he says, conventional batteries can’t fit the bill on that scale and the existing flexible generation options are “looking more and more expensive all the time”. If pumped hydro really looks like an option, we’d better start moving now, he says, because we are heading for a few “bumpy years”.

Tough task ahead

The NEM is sure to change over the next five to 10 years as technological innovation pushes its way into the mainstream, says Bloomberg New Energy Finance senior associate power, energy storage and EVs Ali Asghar. First, an “onslaught” of large-scale renewables will push the network to its limits over the next two to three years; second, Asghar expects another 20GW of behind-the-meter solar to be added over the next decade, and 4GW of behind-the-meter storage; lastly, about 7GW of coal fleet will be switched off by 2030.

“These three changes will bring in a lot of challenges,” Asghar says. Peak demand will become more extreme, driven by weather patterns and a growing population (with a growing appetite for energy); the grid will struggle to keep pace, with frequency and inertia events forcing curtailment, particularly, he says, in northern Queensland; and existing plants will be challenged with steep pricing differentials as the “duck curve” is stretched ever longer.

For example, he says 20GW of small-scale PV generating at midday will put extreme pressure on utility-scale PV. “By 2030 we expect a utility-scale PV plant will earn almost half the average power price,” he says. To owners of those plants, large-scale storage is highly desirable. “Pumped hydro plays a more significant role if they are directly connected to utility-scale plants.”

Pumped hydro is an energy user, Clean Energy Regulator executive general manager Mark Williamson reminded the conference, with about 20% lost as water is pumped uphill for later. If Snowy 2.0 goes ahead, he expects the project will create demand for plenty more variable renewable generation “because that’s the only form of new electricity that will be built”.

Williamson is watching the rise of hybrid projects that include combinations of wind, solar and/or batteries with interest and says if pumped hydro is included they may qualify with AEMO as scheduled – not semi-scheduled – generators. “But there needs to be some modernisation of AEMO’s systems and a lot more transmission to get those working,” he says.

We might not have to wait much longer for the water to run.