Pumped Hydro Energy Storage. How will it change in the NEM and into the future?

Transcription

1 Pumped Hydro Energy Storage How will it change in the NEM and into the future?

2 PHES Key Features Pumped Hydro Energy Storage (PHES) used around the world for a century Established technology Comparatively cheap storage solution in $/MWh 2 Balances power demand - especially with increased renewable penetration Stores energy produced during off-peak periods for use during on-peak hours load shifts Provides ancillary support services Frequency regulation, power factor correction Inertia, spinning reserve Reserve capacity, black start capability 2 PHES Overview

3 Current Global Implementation PHES is by far the most significant form of large-scale energy storage currently used globally 3 3 Global Context 2012 Fraunhofer Institute EPRI

4 Future Global Implementation PHES projects (planned and contracted) are growing around the world 10GW planned or under construction in Europe 4 10GW under construction in China Only 1.5GW PHES currently installed in Australia Significant and growing interest in Australia PV and wind constitute half of the world's new generation capacity installed in 2014 to 2016 (figure from Blakers et al., 2017) 4 Global Context

5 NEM Key Features National Electricity Market (NEM) Power to whole of SE Australia $AUD16.6B traded GW generation + 1GW reserve 40,000km major transmission 30 min settlements 5 min Generator-retailers and Transmission & Distribution separated businesses Some state ownership, mostly of lines Market operator AEMO 5 PHES in Australia

6 Generation in the NEM More than two thirds of electricity from coal-fired power By 2030, three quarters of these >40 years old Strong financial and public support for wind, PV and other renewables, aggressive State targets 6 Currently 3GW of wind/pv installed per year If installation rates continue, two thirds of Australia s energy could come from renewable sources by 2030 Technically feasible to have a 100% renewable electricity grid Storage needed to ensure grid reliability and stability as renewable penetration increases Load balancing, load shifting and ancillary services 6 PHES in Australia

7 PHES in Australia No new large-scale PHES facilities installed in Australia in the last 30 years Report by MEI (2014) suggested lack of economic need and knowledge of potential sites 7 Recent studies renewing interest in PHES Identification of potential sites leading to development of a range of projects Only 450GWh of storage predicted to support a 100% renewable grid 7 PHES in Australia

8 Drivers of Change: Shift towards greater renewable energy penetration Politics and economics Availability of land and water resources for PHES 8 Co-localisation of infrastructure Regulatory change The investment pipeline is dominated by solar 8 Drivers of Change

9 Renewable Grid Penetration and Storage Storage important when variable renewable energy generation rises above 50% of total PV and wind (intermittent generators) replacing coal-fired and gas (dispatchable generators) 9 Grid needs to supply energy over an extended period when wind and sunlight may be scarce (e.g. night, severe storms) Storage needs to deliver instant power output for periods of a few hours to cover: short-term fluctuations in wind and solar outputs peaks in consumer demand unplanned outages of generation and transmission infrastructure 9 100% PHES Renewable the cheapest Grid large capacity electricity storage option

10 Average Daily Po(MW) Electricity Spot Price ($/MWh) Australian Example SA Pumped Storage Less Coal Total Wind Natural Rooftop PV Gas Thermal Generators (Coal/Gas/Diesel) Total Demand Interconnector Flow Electricity Price Nuclear % Renewable Grid Time of Day

11 Comparative Example California Pumped Storage Wind Load Solar Pumped Storage Hydro Natural Gas Less Coal Nuclear % Renewable Grid

12 Comparative Example California 2027 NERC standards prohibit this 1 2 Pumped Storage Load Over-Generation Solar Pumped Storage Hydro Natural Gas Natural Gas Wind Nuclear % Renewable Grid

13 Renewable Grid Penetration Challenges First challenge is over-generation Possible solutions: 1 3 Incentivize on-peak consumption Sell to others Energy storage - chemical, thermal, compressed air Energy storage pumped hydro Curtail renewable production % Renewable Grid

14 Renewable Grid Penetration Solutions Second challenge is load balancing Third challenge is more wear and tear on natural gas generation 1 4 Possible solutions: Modern CT generation (quick start) Energy storage - chemical, thermal, compressed air Energy storage - pumped storage Demand response Purchase additional energy for ramping from the market % Renewable Grid

15 Politics and Economics Political factors: Energy prices a national issue (voters, industry, competitiveness) 1 5 Federal and State competition Federal response, ARENA PHES funding support, Snowy 2.0, biggest PHES project globally this year State response, PHES surveys, PHES funding support Economic factors: Reuse of existing assets (mines, water storages, coal fired power stations) 15 Politics and Economics

16 Bendigo Underground PHES Located in disused gold mine workings under Bendigo Technical and economic feasibility study undertaken MWh of storage capacity 750m generating head Storage reservoirs in two hydraulically independent mine workings Powerhouse and pump station located >800m below ground in existing rock cavern Cost-effective energy storage option for regional city Adaptive re-use of existing infrastructure Opportunity for significant levels of community ownership 16 Politics and Economics

17 Project Scale Wide range in existing and proposed PHES schemes: Cultana, Goat Hill etc: MW 1 7 Snowy 2.0: 2000MW expansion Large schemes: Big increase in storage capacity Contribute to grid stability and security Lower energy prices Optimise use of ideal locations Single footprint Single planning and approvals pathway Budget blowout Requires significant transmission infrastructure upgrades Large environmental and social impacts Lengthy construction periods Single source of support for network stability benefits not broadly distributed 17 Politics and Economics

18 Project Scale Smaller schemes: Utilise bigger range of sites that are located close to transmission lines, cities, etc. location is important 1 8 Potential for co-location with renewable energy generation or other infrastructure Enables wide distribution of storage across grid to support resilience, stability, reliability Schemes can be different sizes to respond to local needs Less likely to require expansion of transmission infrastructure Easier to control budget Reduced social and environmental impacts 18 Politics and Economics

19 Land and Water Resource Availability PHES requires access to land and water 70% earth surface is water, 97.5% salty, <0.5% fresh 1 9 Limited sites for on-river PHES schemes Often compete with environment and other water users for scarce resource Off-river electricity storage offers potential for PHES in Australia Significant number of potential sites identified Less or no competition for water resources Seawater used in place of fresh water Flexibility in placement of reservoirs to maximise head difference and distance to grid 19 Land and Water

20 Cultana Seawater PHES, South Australia ARENA-supported seawater PHES located in SA 2 0 Location identified using GIS algorithm 225MW, 1770MWH/day capacity Water sourced from the ocean Possible use of ocean as lower reservoir Seawater as transfer fluid found to be technically and commercially viable Enables PHES to be utilised in areas of fresh water scarcity Feasibility study undertaken with input from Okinawa seawater PHES scheme 20 Land and Water

21 Water Scarcity Security of Supply Water security a growing issue in Australia and globally Potential to co-locate PHES with desalination facility 2 1 Integrated Pumped Hydro Reverse Osmosis Scheme Pressurised water supply in PHES reduces desalination energy requirements (2kWh/kL versus 3-5kWh/kL) Addresses energy and water security issues Contributes to solving desalination brine disposal challenge Cost efficiencies with co-location - reduced planning, licensing and operational costs Figure: Slocum et al., Co-localisation of Infrastructure

22 Integrated Pumped Hydro Reverse Osmosis Clean Energy System Co-location of seawater PHES, PV generation and desalination facility MW solar PV 300MW seawater PHES 188ML/day desalination facility Addresses water and energy security concerns Pressurised water supply from PHES utilised to reduce energy requirements for desalination Cost efficiencies through co-location Concept study and economic feasibility study 22 Co-localisation of Infrastructure

23 Regulatory Change PHES has the potential to fill dual obligations of the NEM Reliability: provides dispatchable power/firms non-dispatchable power/provides ancillary services 2 3 Emissions: enables higher penetration of renewables Finkel recommendations relating to PHES Inertia requirements Demand-side management Encouraging low-carbon generation technologies NEG has potential to significantly influence direction of PHES Recommendations to include adequate reward/incentive for Provision of long-duration storage (10-100hrs) Provision of ancillary services: Inertia, rapid power response, blackstart capability, voltage control AEMO regulatory change from 30min to 5min settlement period State regulatory environment unclear - some regulations directly supportive, others indirectly 23 Regulatory Change

24 National Energy Guarantee Aims to lower prices, lower emissions and improve reliability Reliability dispatchability 2 4 Weighting of emissions reduction and reliability similar Obligation pushed to retailers and thus effectively to gentailers (given large degree of vertical integration) Contentious, no consensus support Encouragement of investment in the right places? Reliability and system security? 24 Regulatory Change

25 Valuing Energy and Energy Services Australia priced RECs and LGCs and setup the RET with regard to the emissions reduction but without regard to the availability of those renewable electrons with respect to when they were needed now looking for ways to readjust the market to better support the overall system 2 5 Will we make the same mistake twice, will we price reliability on the basis of the availability of the electrons with respect to when they are needed, without considering the true value of the ancillary services needed to support the overall system and achieve real reliability Real inertia Synthetic inertia Synthetic inertia is not equivalent between: Chemical storage Thermal storage Mechanical storage (wind vs flywheels) Pumped Hydro storage Price the real value of what different storage systems can offer in terms of reliability 25 Regulatory Change

26 Pumped hydro has the advantage of being able to positively impact all three elements of the energy trilemma: 2 6 Affordability Reliability Emissions reduction 26