Asia and Oceania, Finance, Pumped Storage Hydro

ARENA to provide $40 million funding for South Australia’s first pumped hydro plant

The Australian Renewable Energy Agency (ARENA), on behalf of the Australian government, has announced up to $40 million in funding towards the deployment of a pumped hydro energy storage (PHES) project in South Australia.

ARENA’s funding will help fast track development of South Australia’s first PHES plant. The successful funding recipient will be at least 200 MW in capacity and must reach financial close by June 30, 2020.

Four proposed large-scale PHES projects under development in South Australia have sought ARENA funding and have been assessed favorably under the Advancing Renewables Program. ARENA will invite developers of these projects to put forward proposals for further assessment that outline how the project will reach financial close and include their lowest funding request from ARENA.

After proposals are received by October, ARENA will undertake further assessment and due diligence on the four projects to select a single funding recipient, with a funding decision to be made by late 2019.

ARENA will work with the Australian Government’s Underwriting New Generation Investments (UNGI) program, which has shortlisted 12 projects including six PHES projects (of which three are in South Australia) and the South Australian Government’s $50 million Grid Scale Storage Fund (GSSF) to support the development of PHES in South Australia.

As South Australia continues to increase its renewable energy make up, ARENA says large-scale storage such as PHES and grid-scale batteries are needed to supply system strength, energy reliability and inertia to the region. The development of a large-scale PHES plant would balance and firm up variability in the South Australian National Electricity Market region, providing a range of services to support grid reliability and security – including essential stability services and “intra day” storage for six to eight hours duration.

“With 50 percent of total energy generation in South Australia coming from variable renewable energy in 2018, and an expectation that this will increase in the next two years, there is an increasing requirement for energy storage to firm and balance the system in that state,” said ARENA Chief Executive Officer Darren Miller. “As part of this, pumped hydro has an important role to play in Australia’s energy transition.

“This funding envelope, and this further assessment, is designed to ensure the best project proceeds with the least Government support.”

ARENA has supported a range of PHES feasibility studies, including Snowy 2.0, Hydro Tasmania’s Battery of the Nation initiatives that include potential PHES sites, Genex’s Kidston Stage 2 PHES facility in Queensland and the proposed expansion of Origin’s Shoalhaven PHES plant in New South Wales.