The role of pumped hydro and batteries
Snowy Hydro is often asked about the role of pumped-hydro and batteries. Let’s be clear, the National Electricity Market (NEM) of the future will need as much energy storage as it can get and like now, it will come from pumped storage and batteries.
For the stability and reliability of the NEM as a system, and to minimise the cost impact of new renewables (wind and solar) on household bills, we’re going to need large scale storage. The only credible option for large-scale storage is pumped hydro.
People ask why we’re comparing ourselves to batteries. Well, Snowy 2.0 will act like a giant battery, storing water which can be turned into dispatchable energy. The comparison is helpful for the community to better understand the size, scale and cost of Snowy 2.0 compared with other storage options.
In terms of total cost, if you were to build the same storage capacity as Snowy 2.0 (350 GWh) with batteries, you would spend well over $200 billion.
The following comparisons demonstrate the relativity between Snowy 2.0 and the alternative of domestic-scale household batteries.
For a single battery:
A single 13.5kWh battery would power a small (4kW, room size, not ducted) air conditioner for 3.4 hours, assuming a hot day where continuous use was required, and that it was fully charged and no other appliances in the house were being used.
A single $11,000 battery, paid off as an annuity over 10 years at an interest rate of 8%, would cost the household $1,650 per year. This same household would pay no more than $40 per year for the storage of Snowy 2.0.
For two batteries:
Two 13.5kWh batteries would power a ducted air conditioning system of 8kW for 3.4 hours (8kW is, these days, classified as a "small" ducted system, which would be sufficient to moderate hot temperatures for a small home), again assuming a hot day where continuous use was required, and that the batteries were fully charged and no other appliances in the house were being used.
Two batteries, again paid off as an annuity over 10 years at an interest rate of 8%, would cost the household $3,300 per year. This household would pay no more than $60-80 per year for the storage of Snowy 2.0.
For five batteries:
For a big, modern house (noting that the floor space of stand-alone dwellings continues to increase, and that the size of domestic air conditioning units is increasing correspondingly), five batteries are assumed at a cost of $55,000, paid off as an annuity over 10 years at an interest rate of 8%, for which the annual cost is $8,250.
67.5kWh would power a 20kW air con unit, on a hot day, for 3.4 hours, again assuming no other appliances were being used. Another alternative would be to assume an 18kW air con unit, which is a popular size, and other things on (lights, dryers, washing machine etc).
Even this household would pay no more than $120 per year for Snowy 2.0, significantly less if the cost of Snowy 2.0 was spread across commercial and industrial users as well (which, in reality, it would be).
As the economy decarbonises, NEM-wide large-scale storage will be important as it will provide reliable power particularly to those people renting homes without batteries, lower socio-economic groups and people in units or dwellings where battery installation is not possible. Snowy 2.0 also comes with an indefinite lifespan; it does not need replacing after 10 years.
The above numbers might seem surprising, but these are the facts. Snowy 2.0 benefits from the fact that its upper and lower water storages, which are enormous, already exist, so the Snowy 2.0 project cost only relates to the new underground power station, tunnels and other infrastructure built for the project.
The other major advantage is that the cost is spread across millions of households and businesses across the eastern seaboard, so the efficiencies of scale for Snowy 2.0 are enormous.
Snowy already has the capability to store huge amounts of energy, through the use of the Tumut 3 pump-storage facility. This capability has been sufficient for the NEM in the past, but it will not be enough in the future.
If Australia is going to reduce its carbon emissions, and therefore build large-scale wind and solar farms, we need a cheap, efficient way of storing the energy produced by these renewable technologies when that energy is not needed. For wind energy, the peak of electricity production occurs overnight. For solar energy, the peak of production occurs in the middle of the day. Demand, however, peaks in the morning and in the evening.
In the end the issue is about providing consumers with reliable and stable energy and large-scale pumped hydro is the cheapest option.