Queensland’s pumped hydro plans

In September 2022, then Queensland Premier Annastacia Palaszczuk announced plans to construct two new pumped hydro projects: Borumba Dam – a 2GW facility located in Imbil, 50km west of Noosa, and the Pioneer-Burdekin facility which plans to offer 5GW of storage, located 75km west of McKay.

These two projects are part of the Queensland Government’s $62 billion Energy and Jobs Plan, which aims to generate 80 per cent of the State’s energy supply from renewable energy by 2035.

As of April 2024, the Borumba Dam project is open for tenders from dam designers, with the Pioneer-Burdekin project still undertaking surveys of the potential site.  

This October, Queenslanders are set to head to the polls for their state election, with the Energy and Jobs Plan, and the two proposed pumped hydro storage projects, a focus point between the two major parties.

So, what is pumped hydro storage, and what is being offered by these projects?

A short explainer on Pumped Hydro

To understand pumped hydro energy storage, you need to first understand hydropower.

Hydropower converts the energy of moving water into electricity. It is produced by passing water, usually from a reservoir or dam, through a turbine. As it passes through the turbine blades, it drives the generator to convert the motion into electrical energy.

How does pumped hydro energy storage work?

Pumped Hydro Energy Storage (PHES) uses two water reservoirs at different elevations as a way of storing and then generating power.  Excess energy, either from the grid or a renewable energy source such as a wind or solar farm, can be used during low demand periods to pump water from a lower dam to a higher one, essentially converting the upper reservoir into a giant battery.

The water (stored energy) in the upper reservoir can then be released to generate electricity by discharging the water through a hydroelectric turbine into the lower reservoir. The water can then be pumped back up from the lower reservoir to the upper reservoir to be stored for when it is next required. Aside from providing long duration storage, another advantage of hydroelectricity is it is dispatchable and can generate electricity almost immediately and at any time, making it possible for the power to be fed into the grid when it is needed, to help reduce surges, avoid blackouts, or meet spikes in electricity demand.

By producing large amounts of electricity over a long duration PHES also can help ensure grid reliability.  PHES can be in the form of an open loop – where the reservoirs are connected to an open flowing water source, or closed loop, where the reservoirs are not drawing from an open water source (see figure 1).

Source: US Department of Energy

How will this be beneficial?

As the energy grid continues to transition, the greatest challenge faced by the sector will be availability of dispatchable energy at times of renewable droughts. Storage in the form of batteries and pumped hydro will play an important part in providing this, alongside fast start gas plants.

During the day, ample amounts of solar power is generated, but due to a lack of long-duration battery storage, a lot of this energy ends up going to waste. Seasonal challenges can also arise with both solar and wind generation with extended periods of unfavourable weather conditions.  Last year, the Federal Government approved a 2.4GWh battery in Melbourne’s north-west, the largest in the country. However, this battery will only be able to store energy for two hours. While this will be beneficial to the grid, it is not able to be relied upon by the sector to dispatch electricity when renewable generation is low, which is where pumped-hydro storage comes in.

The Australian Energy Market Operator’s 2024 Draft Integrated System Plan (ISP) forecasts an almost quadrupling in the firming capacity will be needed from utility-scale batteries, pumped hydro and other hydro, coordinated consumer energy resources as “virtual power plants” (VPPs), and gas-powered generation. Storage ranges from household batteries to “shallow” storage (which can dispatch for less than 4 hours) and deep or long duration storage. This storage can be available for more than 12 hours to help shift energy over weeks or months (seasonal shifting) or to cover long periods of low sunlight and wind (renewable droughts), backed up by gas-powered generation. Queensland’s Borumba project's anticipated 48 GWh capacity is larger than all coordinated Consumer Energy Resourced storage (home batteries, EVs) combined, according to the ISP, while the Snowy 2.0 project is expected to provide 350 GWh of power.

AEMO’s forecast capacities for different types of storage are shown in figure 2.

Figure 2: Energy storage capacity, NEM (2024-25 to 2049-50)*

Source: 2024 Draft ISP. * Based on step change scenario

Pumped-hydro energy storage is a tried and tested method of storage which has been used across the world for almost a century. While it is an expensive form of storage, as noted above, it is the longest form currently available that can dispatch electricity for extended periods during generation downturns. This form of storage also has the potential to be 100 per cent renewable, with the energy being used to pump the water back to the upper reservoir coming from excess energy generated during high periods, such as extreme sunny days or windy days. Depending on the generation mix, this storage facility has the capability of running completely on renewable energy.

PHES can also quickly generate power when demand spikes. Unlike coal, which can take upwards of eight hours to ramp up, hydro ramps up rapidly, which makes it an attractive storage option to deal with rapid changes in output as greater amounts of wind and solar power are added to the grid. 

While PHES can provide a reliable and clean form of energy storage, the projects are not without their drawbacks, the main one being the potential high cost to construct the facilities. The CSIRO’s GenCosts report estimations of storage project capital costs are shown below.

Figure 3: Projected Capital cost for PHES (12 hours) by scenario

Source: CSIRO GenCost

Figure 4: Capital costs of storage technologies in $/kWh (total cost basis)

Source: CSIRO GenCost

Currently, the Borumba Dam project is estimated to costs $14.2 billion, with the Queensland Government committing $6 billion in the 2023-24 budget to build the project, subject to environmental approvals. Modelling done by AEMO, Australia’s market operator, says the cost of building a new hydro project is priced at around $2 million per MW., However, whilst the cost of construction is high, the cost of stored energy is relatively low when compared with generation. A review done by the Australian National University in 2021 found pumped hydro storage costs about $18/MWh, with the cost of transmission and periodic spillage of solar and wind energy when storage is full being taken into account. This is much lower than the cost of solar and wind energy, which the CSIRO estimate to be between $27 and $56/MWh by 2030 for solar and $40 and $59/MWh for onshore wind.

Are there any other alternatives to PHES?

At present, the industry does not have battery technology that can provide similar levels of storage that PHES can. However, there are generation options available which can provide clean energy at a large scale, which can be generated quickly when demand spikes, such as renewable methane gas. In October 2022, consultancy firm Oakley Greenwood published a report outlining alternatives to the Pioneer-Burdekin Pumped Hydro Project, with biogases being offered as a viable option.

‘Biogas’ or ‘biomethane’ is a form of methane produced by the fermentation of organic matter. It is considered renewable because it is produced from organic matter like food and agricultural waste. Importantly, biogases are totally interchangeable with natural gas within the existing gas infrastructure, so can be more economically viable as the production costs are minimized.

Oakley Greenwood argues that the 120GWh of storage proposed by the Pioneer-Burdekin Pumped Hydro could be replaced with 1 to 2 petajoule (PJ) of biogases. Existing landfill and wastewater facilities could produce up to 18 PJ year, which would be enough to meet the 1 to 2 PJ/year target. However, this modelling does not consider the fact Pioneer-Burdekin’s 120GWh of storage is not its annual supply of energy, but the amount it can supply per hour over 24 hours. If Pioneer-Burdekin is utilized for more than 10 days a year, then up to 20PJs of biogases would be required as a substitute, which is more than is produced by our existing landfill and wastewater facilities each year.

Also, while it may seem like a more cost-effective alternative, producing this amount of biomethane would require large amounts of storage itself. Biogases can be seasonal and very peaky, and so would require storage facilities big enough to accommodate for these fluctuations in demand, which the sector does not currently have, and would have to produce. This negates one of the benefits of biogas – that it won’t require as much investment in construction as pumped hydro as the existing infrastructure used for gas can be interchanged to support biomethanes.

Conclusion

It is important to note that the costs of the energy transition will be significant, and large projects will require major investment, from both government and private investors. It is vital that when major projects are being proposed, alternative options are also considered fully to ensure that investment is being spent on the most effective and efficient option. Pumped hydro, which is a tried and tested form of energy storage, will play an important complementary role in the transition to increased renewables. Its benefits in helping Queensland and Australia reach emission goals cannot be understated.