$40 million in ARENA funding for South Australia’s first pumped hydro plant

The Australian Renewable Energy Agency (ARENA) announced last week that it would provide up to $40 million in funding to fast-track a Pumped Hydro Energy Storage (PHES) project in South Australia. ARENA is conscious of the need to store South Australia’s fast-growing renewable generation fleet.

Pumped hydro features among the recipients of feasibility funding under the NSW Emerging Energy Program. A 235 MW expansion of the Shoalhaven pumped hydro system (pictured) has made it onto the shortlist of projects for capital funding.

Image: ARENA

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ARENA has recognised the growing need to store the growing abundance of renewable solar and wind energy being produced in South Australia by providing up to $40 million in funding toward the rapid development of the state’s first pumped hydro storage project.

ARENA CEO Darren Miller has said that pumped hydro will play a growing role in the state’s energy setup. “With 50 per cent of total energy generation in South Australia coming from variable renewable energy in 2018,” said Miller, “and an expectation that this will increase in the next two years, there is an increasing requirement for energy storage to firm and balance the system in that state. As part of this, pumped hydro has an important role to play in Australia’s energy transition.”

There are currently four large-scale PHES projects pursuing ARENA funding, three of which are in the development stage. ARENA invites these projects to put forward proposals for further assessment on how the projects can reach financial close by 30 June 2020.

All three projects already in development have been shortlisted as part of the Australian Government’s Underwriting New Generation Investments (UNGI) program and ARENA will collaborate with UNGI and the South Australian Government’s already existent $50 million Grid Scale Storage Fund (GSSF) to boost PHES development in South Australia.

However, only one of the projects can expect ARENA funding. “Several potential pumped hydro projects are being developed in South Australia, which are well advanced and have been rigorously assessed as high merit. Based on the market need and high construction costs, we expect to fund only one project at this stage,” said Miller.

The proposal which requires the least government support will also be favoured. “This funding envelope,” said Miller, “is designed to ensure the best project proceeds with the least Government support.”

The shortlisted projects include:

  • Sunset Power and Delta Energy’s 242 MW Goat Hill project near Port Augusta.
  • Rise Renewables 250 MW Baroota project which UPC Renewables and its Philippine partner AC Renewables bought a majority stake in this week.
  • AGL’s 250 MW Kanmantoo project.

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