Talking Point: It pays to be wary of dam bluster

//Talking Point: It pays to be wary of dam bluster

Talking Point: It pays to be wary of dam bluster

04 May, 2017

David Tanner

Courtesy of the Mercury

There has recently been a sudden rush of news about pumped storage of energy, with various claims being bandied about by politicians and others.

Unfortunately, this has demonstrated that very few people really understand the pertinent facts.

Pumped hydro storage is a scheme whereby water is pumped uphill using cheap “off-peak’’ energy.

This water is then stored in a reservoir until it can be used to generate electricity to meet peaks in demand by running it back through a turbine.

No additional energy is created in this process — in fact there is an overall loss. Even when using the most efficient motors, pumps, turbines and generators, at least 30 per cent of the original energy is lost in running these machines in both directions.

There are additional transmission losses and significant costs incurred when this energy is moved long distances, say from South Australia to Tasmania then back to the mainland.

The best way for Tasmania to gain advantage from its ability to deliver peak renewable energy is to turn off its hydro plant to conserve water when cheaper sources of energy are available.

Substantial capital costs are required to build all the necessary additional infrastructure, just as when building any large hydro, wind or solar generating plant to take advantage of “free” rain, wind and solar resources.

There must be an economic return on this capital to justify building the scheme in the first place.

The closure and non-replacement of coal-fired stations will make “off-peak” energy a scarce commodity, which means it will become less available to use for pumping water uphill.

All this means that there has to be a very significant pricing premium in meeting peak loads, perhaps up to three or more times the off-peak rate, for pumped storage to be economically viable.

The best way for Tasmania to gain advantage from its ability to deliver peak renewable energy is to turn off its hydro plant to conserve water when cheaper sources of energy are available.

That’s what we have been doing for the past 10 years using the Basslink cable, even though that facility costs Hydro Tasmania about $100 million a year to operate.

Our rush to make money from the carbon tax in 2014-15 by selling most of our stored water turned out to be a very expensive decision when Basslink failed, remaining out of service for six months during a period of record low rainfalls.

At least we are now beginning to rebuild our valuable water reserves as a safeguard against low rainfall and future cable failure.

We can, of course, increase our hydro generating capacity by installing up to two more 240MW turbines at Gordon as provided for in the original design, or by doubling the size of the 90MW Tarraleah power station by building a 17km tunnel from Lake King William to carry more water, but these are expensive options.

They add no more water to existing storages, but simply provide a higher power output without increasing our existing overall energy production.

Providing this additional generation capacity in order to meet peak energy demand on the mainland will, of course, also require construction of another billion-dollar cable across Bass Strait, as well as larger transmission lines across Tasmania.

Who is going pay for all this new infrastructure?

In proposing that Tasmania should become the storage battery for other states, Prime Minister Malcolm Turnbull has promised nothing more than to fund another study, while suggesting that Hydro Tasmania can afford to pay for the billions of dollars of capital investment required to implement such a scheme because it has a “strong balance sheet”.

Really, Prime Minister, is that true?

The Mercury recently revealed that total borrowings by our electricity utilities (Tas Networks and Hydro Tasmania) is already $2.65 billion.

Are we sure that we want to more than double this debt in the expectation that we can sell enough high-value peak energy into the National Electricity Market (NEM) in order to recover the costs of generating it?

Most of this peak demand comes from domestic consumption, which ramps up every morning for a few hours when people get out of bed.

The afternoon peaks have already been reduced by the use of natural gas for cooking and heating.

One of the major sources of peak seasonal energy demand comes from summer airconditioning loads on the mainland, with the resulting surge in spot pricing on the NEM helping Hydro Tasmania cover the costs of operating Basslink.

This peak occurs during the day when solar production is at a maximum from rooftop PV panels, hence reducing the need for battery storage.

Improving the insulation of houses and increasing the efficiency of heat pumps, together with other energy saving initiatives, will also help in reducing these peak loads.

If the efficiency of solar panels can be doubled, as reported in the Mercury recently, and the price of batteries continues to fall, most household energy needs are likely to be supplied by rooftop solar in the foreseeable future.

This will remove a large component of peak demand and free up energy for other uses — if they exist.

Under this likely scenario, the real risk is that a huge investment in generation and transmission assets for pumped hydro storage may have created a stranded asset, so that any such investment may then begin to look like a really doubtful decision.

David Tanner is an independent consulting engineer, with a background in renewable energy, water resources and mining projects.

2017-05-04T10:32:11+00:00 May 4th, 2017|