Baw Baw Pumped Hydro Energy Storage 4

View of reservoirs looking south

How to progress*

In three previous posts we have revisited the possibility of a Pumped Hydroelectric Energy Storage (PHES) scheme near Baw Baw in Gippsland; the projected and growing need for deeper storage in Australia’s electricity market; some refinements to the design; and context to projected environmental impacts. Here we consider how it might happen.

The first thing to note is that, if it were to go ahead, the Baw Baw PHES could not (and would not) happen overnight. Unlike lithium batteries (which Elon Musk famously installed in South Australia within 100 days), several years of feasibility, planning, design, and of course environmental studies and approvals would be required. Such long lead-times, and associated risks, would test the patience of the private sector. Approval periods spanning years – even up to a decade, for the CSG project previously considered- are not unheard of for mining and resource projects: the payback for these, however, is generally short-term and often lucrative.

A large-scale electricity storage project is also one that, to a certain extent, ‘cannibalises’ its own market. The underlying business case relies on buying power when it is plentiful and cheap, and selling it back when it is scarce. Making Gigawatts of additional power supply available will, however, significantly reduce the size and duration of price spikes – leading to lower project revenues. Likewise, buying power on such a scale would put a floor under prices in times of high supply, increasing project running costs. The former is good for power consumers and industry, and the latter a must for the ongoing deployment of new renewable projects delivering cheap, but variable, energy. The project itself, however, may not reap these ‘externalised’ benefits under current market settings.

There may therefore, be a role for Government in initiating, developing, and possibly even building, the Baw Baw PHES scheme. The federal government is doing this for the Snowy 2.0 PHES project, and the state has launched initiatives such as its Renewable Energy Target and virtual transmission reverse auctions, encouraging short-duration batteries. Whilst likely to stack up in the long term on its own financial merits, the benefits would stretch beyond the financial returns of the project itself: confidence and price stability for power consumers; lowered risk and boosted returns for proponents of new wind and solar farms; energy security; lower long-term emissions; and economic activity and jobs in the Latrobe region.

If we are to accelerate the retirement of coal generators in Victoria, and try to meet the emission reductions required to avert the worst-case climate change scenarios, we need to have as many options on the table as we can. Gas has a role to play, but it is increasingly difficult to see how the cost and emissions associated with this can be sustainable in the medium to long term. The Baw Baw Pumped Hydro scheme could have significant long-term benefits for the state, and indeed Australia.

* Our guest contributor is a Gippsland-bred engineer, working in the power industry. Links to previous posts are (1) the growing need for deep and medium storage (2) further engineering insights and refinements and (3) environmental impacts