New South Wales funds pre-investment activities in pumped hydro energy storage for Australia’s NEM

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Five large-scale pumped hydro energy storage (PHES) projects have received a funding boost worth a total AU$44.84 million (US$30.46 million) from the government of New South Wales, Australia.

State treasurer Matt Kean visited an existing pumped storage facility this morning, where the announcement was made. The money will be disbursed through the NSW government’s Pumped Hydro Recoverable Grants Program, which provides grants to developers for early-stage, pre-investment feasibility studies.

“Thrilled to be at Bendeela Pumping & Power Station in Kangaroo Valley to announce $45 million to accelerate pumped hydro across the state,” Kean tweeted earlier today.

“It will deliver nearly 2 GW of electricity for NSW, helping deliver our citizens some of the cheapest and most reliable energy in the world.”

The scheme was launched in recognition that PHES is an effective form of long-duration energy storage (LDES) but comes with lengthy lead times comprising a complex development process expected to take about four years and then another four years for procurement and construction.

As such, required operational start dates for any projects is set for 31 December 2029, with grants recoverable on the achievement of financial close.

The state wants to use the programme to put in place a pipeline of up to 3GW of feasible PHES projects. These would bid for long-term energy service (LTES) agreements under legislation introduced last year called the Electricity Infrastructure Investment Safeguard, and projects would be sited within the NSW region of the National Electricity Market (NEM).

Projects with minimum 30MW output were eligible, offering at least eight hours’ storage duration, although the government expressed a preference for projects of >12 hours. Recipients would be expected to match or better the government funding contribution.

The five awarded projects, totaling 1.75GW are listed below, with further grant awards expected to be made in the coming months.

Project nameApplicantStage of developmentCapacity (MW)Duration (hours)
Lake Lyell PHESEnergyAustralia DevelopmentFeasibility3358
Oven Mountain PHESOMPSFeasibility60012
Shoalhaven Hydro ExpansionOrigin EnergyProcurement23524
Central West Pumped HydroATCO Australia Pumped HydroFeasibility3258
Muswellbrook Pumped Hydro Muswellbrook Pumped Hydro (AGL and Idemitsu JV)Feasibility2508

Elsewhere in Australia, the government of Queensland also said in June that it is funding feasibility studies for at least two new PHES projects, allocating AU$48 million. Queensland is also home to what will be Australia’s first new pumped hydro plant since the mid-1980s, the 250MW/2,000MWh Kidston Stage 2 Pumped Hydro plant which is currently under construction through developer Genex Power.

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