The Australian Energy Market Operator (AEMO) has released an Insights paper that provides new perspectives and deeper analysis on the important role pumped hydro energy storage and strategic transmission developments can play in lowering costs to consumers and increasing the resilience of the National Electricity Market.
The paper is a supplement to the 2018 Integrated System Plan (ISP) and identifies transmission investments needed to connect pumped hydro storage options with customers in NSW, Victoria and Tasmania.
Energy Networks Australia Acting Chief Executive Officer, Tamatha Smith, said that around the world, the logical response to growing levels of renewable generation was to create a more connected system.
“Transmission is our electricity superhighway and more strategically placed transmission means more power can reach more customers with greater reliability,” Ms Smith said.
“Coordinated investments in transmission and interconnections between states will ensure electricity from new generation can be shared across the National Electricity Market.
“This will support better reliability and system security as coal-fired power stations retire and put downward pressure on wholesale prices, which means lower bills for customers.”
Snowy Hydro 2.0 in NSW and the Battery of the Nation Project in Tasmania offer significant potential for storage and electricity generation, but will require new transmission links to unlock their full potential.
“The priority for network businesses is to keep costs for customers as low as possible while ensuring new generation can be integrated into the electricity system efficiently,” Ms Smith said.
“Transmission costs are a very small component of power bills and a more connected system is a more competitive system, which will put downward pressure on power prices.
“As highlighted by AEMO, it will be important the projects identified in the ISP and Insights paper are progressed in a timely manner. It also is important that we have regulatory and policy certainty to support the investment required.”
Hydro Tasmania’s Chief Executive Officer, Steve Davy, said the Insights paper reaffirms that the future National Electricity Market will need the clean, reliable and affordable energy that Tasmania can provide.
He highlighted that AEMO’s study outlines that early pre-emptive development of strategic interconnection such as Marinus Link would cost effectively increase the resilience of the power system if coal-fired generation were to close earlier than expected. In this scenario, 4.1GW of storage capacity will need to be installed by 2030.
“Tasmania has what the rest of the country needs—Battery of the Nation represents one of the most reliable and cost-competitive solutions for meeting Australia’s future energy needs,” Mr Davy said.
“Tasmania has significant storage capacity just waiting to be developed and our long duration pumped hydro is one of the most cost-competitive storage options available.
“One of the major advantages of our pumped hydro is that it can be developed in stages, which will ensure ongoing reliability and energy security as the market develops.”
The Australian Energy Council’s Chief Executive, Sarah McNamara, said that proposals in AEMO’s Insights paper will now need to be carefully considered for their costs and benefits through the usual independent processes overseen by the Australian Energy Regulator.
“AEMO’s paper seeks to forecast and address the issues emerging with the growth of renewables supported by federal and state government targets, increased scope for large-scale storage systems to connect to the grid and the aging of existing generation plant,” Ms McNamara said.
“Each transmission and network investment will unavoidably affect market investments, so they need to be individually assessed.
“This is critical to ensure not just the appropriate timing, but also the cost-effectiveness for customers who will pay for the new links, as well as providing a predictable framework for generation investors.”
