Hydropower is poised to play an “integral role” in supporting the integration of increased wind and solar generation in Australia’s national electricity market, according to the country’s Clean Energy Council.

The council has released a major new report, 'Hydropower: The backbone of a reliable energy system', which explains the renewable technology’s enormous potential to provide storage and flexibility for wind and solar power while also filling the gap left by retired coal power stations.

There is currently around 8.5 GW of hydropower capacity in operation across Australia, providing approximately 6.4 per cent of total energy demand in 2020. To replace retiring coal power stations, the report however explains that the country needs an estimated 19 GW of dispatchable energy by 2040.

Malcolm Turnbull, Australia’s former Prime Minister and Chair of the International Forum on Pumped Storage Hydropower, and Roger Gill, President of the International Hydropower Association (IHA), both spoke at the launch of the report on 17 November 2021.

“This is the new age for pumped storage. But here's the thing: we have to get on with it,” said Mr Turnbull. “The application of pumped storage has never been more important than it is today.”

Mr Gill, moderating the panel discussion, provided global context by highlighting the urgent task facing governments, industry and investors around the world. “Investment in sustainable hydropower, including pumped storage, is not yet anywhere near the rate necessary to support the clean energy transition,” he warned.

‘Investors are willing to spend the money’‍

Clean Energy Council Chief Executive Kane Thornton said: “While these projects typically have a high upfront capital cost, investors are willing to spend the money to build new hydropower and to refurbish existing assets. However, to make this investment worthwhile, investors need to know that these projects will recover their investment and receive revenue for the value they provide customers and the energy system.

"Unlocking the full potential of hydropower, therefore, requires market reforms that incentivise these services as well as strategic investment that underpins new investment and critical network expansion and augmentation to ensure strong connection and access to the energy grid,” Mr Thornton added.

Earlier in November, Australia’s New South Wales Government revealed that its A$50 million Pumped Hydro Recoverable Grants Program had received 11 GW of proposals – over five times the 2 GW it needs to support wind and solar projects within the state's renewable energy zones. Thornton said that this is further evidence of strong investor appetite under the right policy settings.

International forum recommendations

The International Forum on Pumped Storage Hydropower is a coalition of 13 governments chaired Mr Turnbull and the U.S. Department of Energy, the International Hydropower Association (IHA) and involving more than 70 multilateral banks, research institutes, NGOs and public and private companies.  

The forum published recommendations in September 2021 addressing the urgent need for green, long-duration storage in the clean energy transition. The recommendations advised governments to:

• ‍Assess long-term storage needs now, so that the most efficient options, which may take longer to build, are not overlooked.  ‍
• Ensure consistent, technology neutral comparisons between energy storage and flexibility options. 
• ‍Remunerate providers of essential electricity grid, storage, and flexibility services. 
• ‍Licensing and permitting should take advantage of internationally recognised sustainability tools.
• ‍Ensure long-term revenue visibility with risk sharing to deliver the lowest overall cost to society. 
• ‍Assess and map for pumped storage potential existing hydropower assets and prospective sites.
• ‍Support and incentivise long duration storage in green recovery programmes and green finance mechanisms. 
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