Australian electricity options: pumped hydro energy storage

20 July 2020

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Professor Andrew Blakers, Dr Matthew Stocks and Bin Lu
Australian National University

Executive summary

  • With increasing penetration of variable renewable electricity generation in the electricity grid, there is a need for large-scale energy storage to assist in demand management. Pumped hydro schemes provide most of this energy storage around the world and Australia has no shortage of potential sites that could be used to support the increasing share of renewable generation.

Australian electricity options are short briefings on the principal energy sources and storage options being debated in Australia, including: coal, natural gas, wind, nuclear, photovoltaics (PV) and pumped hydro energy storage (PHES).

The global COVID-19 pandemic and its economic consequences mean that statements and projections about future demand and pricing of energy options may no longer be reliable. Readers should note that some figures quoted in these briefings may pre-date the pandemic.

Solar photovoltaics (PV) and wind together constitute 60% of net new electricity generation capacity installed each year worldwide, and effectively 100% in Australia. Coal, oil, gas, nuclear, hydro and other renewables provide the balance. The fundamental reason is that the cost of new-build PV and wind plant is now lower than the cost of new-build fossil and nuclear plant.

Electricity generation from PV and wind is variable. When the proportion of renewable electricity rises above about 50%, then significant storage is needed. Pumped hydro energy storage has a 97% share of the global storage market, although battery storage is expanding rapidly. Additionally, demand management and stronger interstate interconnections smooth out local adverse weather and complement storage.

Pumped hydro energy storage

Pumped hydro energy storage (PHES) constitutes most energy storage worldwide. When electrical energy is plentiful and cheap, it is used to pump water from a lower reservoir to a nearby upper reservoir through a pipe or tunnel. During periods of peak demand, when electricity is expensive, the pumped water is released downhill through a turbine to generate electricity (see Figure 1). About 80% of the electricity used to pump the water uphill is recovered, and 20% is lost.

Figure 1: How pumped hydro works

Source: Australian Renewable Energy Agency (ARENA), Winning the uphill battle. How pumped hydro could solve the storage problem, ARENA website, 20 August 2017

In addition to storing energy, pumped hydro energy storage has additional capabilities that help support the electricity system. Pumped hydro energy storage can provide excellent inertial energy (from the heavy rotating generator) which helps stabilise the system against disturbances; fast response time (idle to full capacity in one or two minutes); and black start capability (to restore a collapsed grid). The operational lifetime is 50–100 years, with low operational costs.

Australia already has river-based pumped hydro energy storage facilities at Wivenhoe, Shoalhaven and Tumut 3. Construction of Snowy 2.0 has commenced—this project would add 2,000 MW of generation to the National Electricity Market (NEM) and provide about 175 hours of storage. The Kidston pumped hydro scheme in an old gold mine in Far North Queensland has received Northern Australia Infrastructure Facility (NAIF) funds. A further six pumped hydro energy projects have been shortlisted in the Underwriting New Generation Investments program.

Off-river pumped hydro energy storage

Pumped hydro energy storage located away from rivers (‘off-river’) is well-suited to low cost short-term storage. Off-river pumped hydro energy storage takes advantage of the vastly larger area of land that is off-river compared with that available around ‘on-river’ sites, which provides the opportunity to find numerous good sites close to loads and transmission powerlines.

Unlike conventional on-river hydro power, off-river (closed loop) requires pairs of reservoirs that are generally 10–100 hectares in size, rather like oversized farm dams, located away from rivers and national parks in hilly country. These sites are separated by an altitude difference (head) of 200–900 metres and joined by a pipe or tunnel containing a pump and turbine. In these systems, water cycles in a closed loop between the upper and lower reservoirs. Off-river pumped hydro energy storage differs significantly from conventional river-based hydro in that:

  • the reservoirs are small (hundreds rather than thousands of hectares). Typically, conventional hydro-electric systems are located in river valleys with lake areas of thousands of hectares and expensive and extensive flood control measures to cope with once-in-ten-thousand-year floods
  • minimal flood control measures are needed because the reservoirs are deliberately placed away from watercourses that have sufficient catchment to cause serious flooding
  • the heads are 2–5 times larger because the upper reservoir can be on top of a hill rather than in a river valley. An increased head is advantageous because a doubled head allows doubling of energy stored and power developed, while the cost is generally less than doubled and
  • there are minimal environmental impacts because reservoirs are small and river flows are not disturbed.

Energy storage needs

A key point in relation to storage in a grid dominated by PV and wind is that a relatively small amount of storage is usually sufficient. Short-term storage (around 20 hours) covers a variety of scenarios, including high-demand events such as hot summer afternoons and cold winter mornings and evenings; night-time; periods of low supply caused by wind lulls and cloud cover; plant and transmission line failure; and the time required to bring a fossil fuel power station on line or implement demand management if the supply shortfall is likely to be extended. Additionally, short-term storage improves the load factor of constrained power lines to delay or avoid their duplication—for example powerlines connecting wind and solar farms in windy and sunny rural regions to national grids.

Today the balancing requirement is met through traditional hydro and low-duty cycle gas power stations. In the future, new pumped hydro energy storage could increasingly take on this role as PV and wind generation increases.

The NEM and grid covers eastern and southern Australia but excludes Western Australia, the Northern Territory and remote regions. Recent work shows that about 450 GWh of widely distributed storage is required to stabilise the NEM when renewable electricity reaches 100% (mostly wind and PV with some existing hydro and bio energy). This corresponds to an area of off-river pumped hydro energy storage equal to about 4,000 hectares (upper and lower reservoirs combined), which is a tiny fraction of the Australian landmass.

Figure 2: AREMI (Australian Renewable Energy Mapping Infrastructure) synthetic image of potential PHES upper reservoir sites near Araluen (Canberra district). The lower reservoirs would be at the foot of the hills. Head is up to 600 m. The sites depicted have enough storage to support 100% renewable electricity in NSW.

Source: M Stocks, R Stocks, B Lu, C Cheng, A Nadolny and A Blakers, A global atlas of pumped hydro energy storage, 28 March 2019. Image credits: Data 61 and Bing maps

Sites for pumped hydro energy storage

Potential sites for off-river PHES can be identified from a geographic information system (GIS) platform, such as ArcGIS, based on algorithms with defined search criteria. Detailed information such as head, reservoir area, average dam depth and storage capacity is then derived from the search results for further analysis.

A study at the Australian National University (ANU) identified about 3,000 low-cost potential sites around Australia with head typically better than 300 metres and storage larger than one gigalitre (see Figure 3). The sites identified have a combined energy storage potential of around 163,000 GWh. To put this into perspective, a transition to a 100% renewable electricity system would need 450 GWh of PHES storage. The potential pumped hydro energy storage resource is almost 300 times more than required. Developers can afford to be very selective since only about 20 sites (the best 0.1% of sites) would be required to support 100% renewable electricity generation.

Figure 3: distribution of pumped hydro energy storage sites identified by ANU.

Source: M Stocks, R Stocks, B Lu, C Cheng, A Nadolny and A Blakers, A global atlas of pumped hydro energy storage, 28 March 2019. Image credits: Data 61 and Bing maps

Energy storage in pumped hydro

The energy storage capability of a pumped hydro energy storage system is the product of the mass of water stored in the upper reservoir (in kilograms), the usable fraction of that water, the gravitational constant, the head (in metres), and the system efficiency. By way of example, a pumped hydro energy storage system might comprise twin 20-hectare reservoirs, each 20 metres deep, with a usable fraction of 85%, separated by an altitude difference (head) of 400 metres, and operating with a round-trip efficiency of 81% (90% for each of the pumping and generating cycles). This equates to a usable mass of water (when the reservoir is full) of 3.4 GL. Accounting for pumping and generating losses, the effective energy storage capacity is about 3 GWh (or 300 MW of power for ten hours). Roughly speaking, 1 GWh of energy storage requires 1 GL of stored water for 400 m head.

Water use

The use of fresh water rather than salt water is preferred to reduce corrosion of turbines, pumps and pipes and to minimise the risk of salt contamination of the land environment. Reservoirs can be lined if necessary to minimise seepage.

Evaporation rates in reservoirs are relatively high at up to 2,500 mm per year. Evaporation suppressors in the form of coverings over the water reduce evaporation by reducing solar heating of the water, trapping water vapour and reducing wind flow across the water surface. High-quality suppressors reduce evaporation by 90%. This means that rainfall exceeds annual evaporation in most years, and top-up water requirements will be minimal. Harvesting of small amounts of water from micro gullies located near the reservoirs provides additional water at low cost. Whether or not evaporation suppressors are used would depend upon the cost of commercially supplied water or the availability of local water.

The initial water fill would be required over the next one to two decades as reservoirs are progressively constructed to support increasing amounts of PV and wind. The reservoir water requirement amounts to much less than 1% of the annual Australian commercial water market.

Building off-river pumped hydro storage

An ideal pumped hydro energy storage site has a large head because doubling the head doubles the power and energy available from the upper reservoir, and halves the water requirement for a given amount of storage, but usually does not double the cost. Another important requirement is that the pipeline or tunnel connecting the upper and lower reservoirs be short and steep for a given head. A slope steeper than 1:10 is preferred to minimise cost.

Preferably, the reservoirs are not located below any significant catchment to avoid the cost associated with coping with occasional floods. Some potential sites will be unsuitable because of poor geology, restrictions on allowed land use or poor access. The three common types of site are:

  • turkey nest—the upper reservoir is built at the top of a flat hill. Earth and rock is scooped from the interior to create a continuous earth wall 10–20 m high
  • head of gully—an earth wall is placed across a small gully near the top of a mountain to impound water and
  • old mine sites—the mining pit can form the lower reservoir, and the upper reservoir can be a turkey nest reservoir located near the edge of the pit. An example is the proposed 250 MW Kidston pumped hydro energy storage project in an old gold mine in north Queensland.

Pipes, pumps, turbines, generators, substations and powerlines are standard equipment that is widely available from the hydro-electric power industry. Construction of reservoirs within Australia also draws upon extensive experience in the construction of farm dams and tailings dams for mining operations.

Indicative cost

Most of the costs of off-river and conventional (on-river) pumped hydro energy storage are similar. The main difference is that off-river pumped hydro energy storage uses relatively tiny and low-cost reservoirs that have a much larger head and do not require expensive flood control. Costs of off-river pumped hydro energy storage systems are relatively predictable because each off-river pumped hydro energy storage site looks much like another, whereas river valleys vary greatly. Power costs (pipe, pump, turbine, generator, transformer, control, transmission) comprise most of the costs and amount to around $800 per kilowatt for a good site. The energy cost (the reservoirs) amount to about $70 per kilowatt hour. Thus, the expected cost of a 1,000 megawatt pumped hydro energy storage system with a head of 600 m and 14 hours of storage is about $1.8 billion.


There are effectively an unlimited number of suitable sites for pumped hydro energy storage. Off-river pumped hydro energy storage can facilitate high (50–100%) penetration of variable renewable energy at modest cost through the provision of low-cost short-term mass-storage.

References and further reading

A Blakers, B Lu and M Stocks, ‘100% renewable electricity in Australia’, Energy, 2017, 133, 15 August 2017, pp. 471–482.

X Yao, H Zhang, C Lemckert, A Brook and P Schouten, ‘Evaporation reduction by suspended and floating covers: overview, modelling and efficiency’, Urban Water Security Research Alliance, Technical Report No. 28, August 2010.


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