Hydro power: the backbone for renewables in Australia

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by Steve Davy, Chief Executive Officer, Hydro Tasmania

Hydro power, and the role it will play in Australia’s energy system, has moved to the front and centre of mind of the industry as we seek out solutions that will help smooth the path to a future that is clean, affordable and reliable.

Here, Steve Davy outlines the reasons why hydro power has moved from fringe player to a technology that could quite literally act as a “battery of the nation”.

Hydro power is re-emerging as a serious contender to help solve the nation’s future energy challenges.

For so long the renewable energy source taken for granted on mainland Australia, hydro power actually represents the largest current source of flexible and controllable renewable energy generation in the National Electricity Market (NEM) and offers terawatt hours of long duration energy storage.

Its value was there for all to see during the recent heat waves that saw the people of Victoria relying on hydro power – some of it from Tasmania – to keep the lights on and the air-conditioning units working where possible as state-based generation failed to cope with record summer temperatures.

Tasmania could have actually done a lot more at the time with over 450MW of unused hydro generation not being utilised because of a lack of enough interconnection with mainland Australia.

The resurgence of hydro power in Tasmania, in the public’s mind at least, began with the announcement of plans for a massive expansion of Tasmania’s hydro power system announced in April 2017.

Hydro power has served Tasmania well for over 100 years, but what was being proposed was for the nation’s smallest state to play a much bigger and more crucial role in Australia’s energy future.

The Battery of the Nation concept was a bold vision that pitched Tasmania as a clean energy leader of Australia. The State would play a key role in filling the gap left by the retirement of coal-fired power and provide a solution to the unprecedented transformation of the NEM as it grapples with a rapid change of its generation mix.

That transition is bringing significant uncertainty and risk to both generators and customers.

The announcement helped kick-start a debate that Australia had to have. This centres on how best to use existing sources of renewable energy such as hydro power, along with pumped hydro energy storage and new sources such as wind and solar, to help maintain energy reliability, stability and security, and help to ensure future reliability while minimising price issues for customers.

It also considers how this should be supported by the Federal Government, particularly through the Australian Renewable Energy Agency (ARENA).

All this was clearly on the mind of the Federal Government in February this year when it put hydro power front and centre of a number of major announcements.

Firstly was the welcome support for a proposed additional 1200MW of interconnection capacity between Tasmania and Victoria. This was quickly followed by support for work to identify a pumped hydro project in Tasmania that could be ready to go when a second interconnector comes online in 2025.

More interconnection between Tasmania and Victoria can unlock the full potential of Tasmania to support the NEM as it transitions over coming decades.

In its 2018 Integrated System Plan, the Australian Energy Market Operator (AEMO) forecast that up to 17,000MW of utility storage will need to be developed as part of a least cost transition of the electricity sector by 2040. Much of this could be needed sooner if the retirement of coal-fired generation occurs earlier.

Storage is an efficient way to match generation with load. This will become increasingly important as our generation becomes  more variable (through increasing wind and solar).

The two main forms of viable energy storage are batteries and pumped hydro. Both will be required in the future. While batteries are ideal for short-term system response, pumped hydro is ideal for long duration storage.

Pumped hydro is very much front and centre of Hydro Tasmania’s plans. It provides the flexible, responsive and dispatchable capacity and storage needed to meet Australia’s growing energy needs and there are thousands of megawatts of pumped hydro potential just in Tasmania.

We have natural advantages with an existing hydro power system and landscape suited to pumped hydro development. Pumped hydro represents the next generation of Tasmanian hydro power, and will let us re-use our hydro water again and again to create clean energy.

Pumped hydro, wind and solar will work together like a giant renewable energy battery, providing a stable and reliable clean energy system. When the wind blows and the sun shines, but people aren’t using much power, excess power can be used to pump water back up into storages.

When the wind and sun aren’t generating enough power to meet demand, the pumped hydro system swings into action and makes up the shortfall. Pumped hydro will be particularly important if these highs and lows of energy last for many hours, even days.

Pumped hydro also delivers many of the stabilisation services needed by the system.

With the amount of coal power that’s likely to be decommissioned in coming decades, it’s clear that large scale hydro power storage projects like Battery of the Nation and Snowy 2.0 will be needed, and much more.

As part of the Battery of the Nation initiative and supported by ARENA, Hydro Tasmania’s analysis shows Tasmania has a competitive and cost-effective solution to Australia’s future energy needs. And Tasmania has what the rest of Australia needs – low cost, reliable and clean energy.

The Tasmanian Government recently described plans for a second interconnector, TasNetworks Project Marinus, pumped hydro investments and the wind resource unleashed as “the single biggest economic opportunity for our state over the next 15 years”. While undoubtedly true, there is a lot of work to do.

It is crucial for the market to start addressing the challenges now as these projects take time to design and construct. Investment decisions are needed over the next two years to ensure solutions are available in advance of a market shortfall.

Most importantly, we need to set the scene for a co-ordinated approach, involving government at the federal and state level and industry, to combating future energy challenges, with hydro power front and centre of the necessary solutions.

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