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NSW, Australia, funds pre-investment to fast-track pumped storage

Five large-scale pumped-storage projects totalling almost 1.75 GW in Australia’s state of New South Wales have received funding support worth nearly A$ 45 million (US$ 30.5 million) from the State Government, to assist with early stage development.

The funding, which was announced by the NSW Minister for Energy and Treasurer Matt Kean on 2 September, has been awarded for the 600 MW Oven Mountain scheme being developed by OMPS, the 335 MW Lake Lyell project, which is being developed by EnergyAustralia, the 325 MW Central West project, to be implemented by ATCO Australia, the 250 MW Muswellbrook project, which is being developed by a joint venture of AGL Energy and Idemitsu, and the 235 MW Shoalhaven Hydro Expansion by Origin Energy. Procurement has begun for the Shoalhaven project; the other four are undergoing feasibility studies. The Shoalhaven project offers 24 hours of storage duration, the Oven Mountain project offers 12 hours, and the three other projects each offer up to eight hours of storage. The funding, under the NSW Pumped Hydro Recoverable Grants Programme, provides recoverable grants to pumped-storage developers to help cover initial costs (such as early-stage pre-investment feasibility studies) and to lower investment barriers for the private sector, said Kean. “Funding agreements are already in place with five applicants, who have received a total of A$ 44.8 million to support pre-investment activities, establish project feasibility and develop a strategic business case,” he said. “If these projects proceed to construction, they are expected to create more than 2300 jobs and attract A$ 4.4 billion (US$ 3 billion) of private investment, which will help support the economies in the regions”, he added. Kean said the state’s renewable energy policy is intended to help replace aging coal-fired stations and help to build a clean energy future. He added that pumped storage is a key component of the state’s renewable energy plans. “This is an advantage for NSW, as these grants will be repaid to the Government if a project reaches financial close, meaning that these same funds could be used to support even more projects in future,” Kean said. The scheme was launched in recognition that pumped-storage is an effective form of long-duration energy storage, but comes with lengthy lead times and a complex development process, expected to take about four years and then another four years for procurement and construction. As such, required operational start dates for any projects are set for 31 December 2029, with grants recoverable on the achievement of financial close. NSW has a target to build at least 2 GW of new long-duration storage by 2030, and the Govern­ment has committed A$ 97.5 million (US$ 65.8 million) to accelerate pumped-storage schemes that could meet that target. This includes financing for private projects, as well as funding to undertake site investigations for pumped-storage potential on existing WaterNSW dams. Under the programme, developers can bid for long-term energy service agreements under legislation introduced last year, called the Electricity Infrastructure Invest­ment Safeguard, and projects would be sited within the NSW region of the National Electricity Market (NEM). Projects with a minimum of 30 MW of capacity are eligible, offering at least eight hours’ storage duration, although the Government expressed a preference for projects with storage of more than 12 hours.