Australia thinking to revisit hydro scheme as coal power wanes.

A vast hydroelectric project completed more than 40 years ago in the Australian Alps is the centerpiece of a 2 billion Australian dollar ($1.53 billion) rescue plan being pushed by Prime Minister Malcolm Turnbull to stave off a potential energy crisis in the country’s populous eastern half.

Known as the Snowy Mountains Scheme, the project spanned two and a half decades, from 1949 to 1974, and employed 100,000 men and women — many of them immigrants from war-torn Europe — in the alpine region that straddles the border between the states of New South Wales and Victoria. The workers battled extreme weather, poor roads and harsh living conditions, sometimes sleeping under canvas in temporary camps, to complete the mammoth job.

With 16 dams and 145km of interconnected tunnels, the scheme has been hailed as one of the great civil engineering feats of the modern world. Its original aim was to divert water from the Snowy Mountains to irrigate inland crops, but its seven hydropower stations also provide peak-load power to Australia’s national electricity market. It accounts for 32% of renewable energy available to the country’s eastern mainland grid.

Now, with eastern Australia facing potential energy shortfalls and large price increases as baseload power stations close and the grid struggles with the challenge of fluctuating wind and solar inputs, Turnbull is proposing to build “Snowy 2.0.”

The notion that Australia has an energy problem seems incongruous, since it is one of the world’s biggest exporters of thermal coal and liquefied natural gas, and has sufficient fossil fuel reserves to keep its baseload power stations humming indefinitely.

However, much of the gas in Australia’s eastern half is exported, and there is little private sector investment appetite for funding new coal-fired plants because government renewable energy targets have directed investment toward wind and solar generation. State government policies and environmental opposition have crimped onshore gas development.

Turnbull’s Snowy 2.0 plan involves a 50% expansion of the existing 4,000-megawatts Snowy scheme and an enhancement of its role as a “giant battery” through “pumped hydro” storage capacity. Pumped hydro involves releasing water from a reservoir during peak demand hours to drive turbines below the dam, and then pumping the water back up during off-peak hours.

The scheme is one of a number designed to take advantage of technological improvements in storage capacity. Others include an innovative scheme launched on March 16 by AGL, an Australian energy company whose Virtual Power Network uses cloud-based software to aggregate and discharge power from batteries placed in homes in Adelaide, the capital of the state of South Australia.

AGL’s A$20 million scheme is part-funded by the federal government’s Australian Renewable Energy Agency. AGL chief executive Andy Vesey said the 5MW peak capacity virtual network was a “practical example of the new energy future.”

Other ideas include the use of a massed array of high-capacity batteries produced by Tesla, a U.S. auto manufacturer and energy storage company, and a hot silicon thermal energy storage system being trialed by an Australian company called 1414Degrees (1,414C is the melting point of silicon).

Tesla has offered to provide a 100 megawatt-hour battery farm to South Australia for A$33 million before installation costs, but 1414Degrees claims its molten silicon technology has major energy storage cost and performance advantages over Tesla’s lithium-ion batteries, a development of the conventional storage system for solar and wind power generation.

1414Degrees has built a pilot plant in Adelaide to test its process, and aims to build a commercial-scale plant later this year. Matthew Johnson, the company’s chief technology officer, told the Nikkei Asian Review that the demonstration plant had proved the technology, with results exceeding expectations. “It has validated thermal assumptions and is now being used to test components for the larger commercial versions,” he said.

The company, which is seeking to raise A$10 million and list on the Australian Stock Exchange by June 30, has been developing its thermal energy storage process for a decade, building on work originally patented by the government scientific research agency CSIRO.

Announcing the 2,000MW expansion plan for the Snowy Mountains on March 16 at Talbingo, the site of the project’s biggest reservoir, Turnbull hailed the original scheme as an “extraordinary achievement” that flowed from the vision and courage of the generation that won World War II.

“We will continue with that courage. The projects that we are talking about today … were designed and engineered decades ago by the men and women who built this,” he said. Turnbull added that a feasibility study by the scheme’s operator, Snowy Hydro, would be completed by the end of this year, and construction of 27km of new tunnels and a new underground power station would begin soon after that. Snowy Hydro chief executive Paul Broad estimated that construction would take four years.

“We are going to put the accelerator down on Snowy Hydro’s development,” Turnbull said. “In doing so, we will be putting the brake on rising energy prices.” The prime minister said Snowy Hydro, which is owned 13% by the federal government, 29% by the Victoria state government and 58% by the New South Wales state government, was a “giant battery” that would deliver affordability and reliability.

Snowy 2.0 is a response to an emerging energy crisis in eastern Australia, where prices are rising as fossil-fuel baseload power stations are phased out and wind and solar power capacity is added. In the absence of massive battery storage the intermittent unreliability of wind and solar power have played havoc with the electricity grid, exacerbated by extreme weather conditions during the recent southern hemisphere summer.

South Australia, which relies on renewable power sources for more than 40% of its energy needs, was particularly hard-hit when violent weather conditions and wind power fluctuations destabilized the grid and knocked out an interconnector line that brings in power from neighboring Victoria and New South Wales.

A state-wide blackout in September caused industrial and residential chaos. The Anglo-Australian mining group BHP Billiton said power losses at its Olympic Dam copper-gold-uranium mine in the state cost it $105 million in revenue.

South Australia’s last big coal-fired station closed in March 2016. The supply situation will become worse when Victoria’s 1,542MW Hazelwood power station is phased out from March 27. Hazelwood, built more than 50 years ago, runs on environmentally-dirty brown coal, and provides baseload power to the national grid.

South Australian Premier Jay Weatherill, whose Labor state government is at odds with Turnbull’s Liberal/National Party federal government over energy security, complained that South Australia was being badly let down by a “broken” national electricity market.

Weatherill announced an A$550 million energy security plan on March 14 that includes spending A$360 million on a new 250MW government-owned gas-fired power plant and the building of 100MW of grid-connected battery storage. Weatherill, citing a “lack of national leadership on energy policy,” said South Australia would take charge of its own energy future.

During his Talbingo announcement and in subsequent media interviews, Turnbull dismissed Weatherill’s plan as an “expensive catch-up.”

He added: “As you have more intermittent or variable renewables, like wind and solar, you need to have more storage. This is the point I have been making for some time now. This was the thing that our friends in South Australia overlooked, frankly.”

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