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Another example of Australia’s commitment to pumped storage is the Borumba Pumped Hydro project in Queensland. This project aims to support the state’s renewable energy transition by harnessing the existing Borumba Dam for pumped storage. With a capacity of 2000 MW, the Borumba Pumped Hydro project will store excess energy generated from renewable sources like solar and wind, ensuring reliable energy supply during peak demand periods.
Borumba Pumped Hydro Project
Pumped storage hydropower will play a critical role in balancing supply and demand in Queensland, a region known for its solar potential. On 14 August 2024, Queensland set a new minimum operational demand record of 3,096 MW, down from 3,131 MW in October 2023, with rooftop solar contributing 47.3% and grid-scale solar adding another 10%. These conditions, which also included contributions from black coal (40%) and wind (1.6%), saw wholesale electricity prices drop to an average of -AUD 44.61 between 8 a.m. and 4 p.m. This development underscores the effectiveness of the “water + sun” model, where solar energy is complemented by pumped storage to ensure grid reliability.
Queensland Minimum Operational Demand
Pumped Storage in Europe: A Growing Role in Energy Transition
While Australia has been making strides, Europe remains a key player in the global pumped storage sector. With an increasing focus on renewable energy and grid decarbonisation, Europe’s pumped storage projects are integral to ensuring that renewable energy sources like wind and solar are effectively integrated into the grid.
In fact, Europe is home to some of the world’s largest pumped storage facilities, contributing significantly to both energy storage and grid stability. According to the European Commission, Europe has approximately 45 pumped storage plants, which account for nearly 4,000 MW of installed capacity. These plants are crucial in balancing the intermittent nature of renewable energy sources like wind and solar.
A key example of Europe’s efforts in pumped storage is the planned 1,000 MW pumped hydro storage project in the Swiss Alps, which will complement the country’s renewable energy transition. Additionally, the UK has recognised the importance of PHES with the planned development of several pumped storage plants, including the 1,500 MW Cruachan 2 facility in Scotland. The UK aims to develop more than 10,000 MW of new storage capacity by 2050, with pumped storage being a key contributor to meeting this target.
Risks and Challenges for Pumped Hydropower Projects
Despite its potential, pumped storage hydropower faces several challenges in both Australia and Europe, many of which are inherent to large-scale infrastructure projects. These include:
- Site Selection and Environmental Impact: The success of pumped storage projects is heavily dependent on suitable site selection, which can be challenging. Environmental concerns, such as the impact on ecosystems, are often raised, and many of the most suitable sites are in sensitive or protected areas. In Europe, for example, the location of pumped storage projects often requires extensive environmental assessments and consultations with stakeholders.
- Water Availability and Licensing: Regulatory hurdles related to water rights and availability can delay or even halt the development of pumped storage projects. Water use, management and licensing are critical issues in countries like Australia, where water resources are often scarce or contested.
- Grid Integration: While the technology behind pumped storage is well-established, integrating these systems into modern energy grids can be technically complex. In both Australia and Europe, grid operators must ensure that pumped storage systems are effectively coordinated with renewable energy sources, creating a reliable and stable energy supply.
- Social License and Community Engagement: One of the most significant challenges is obtaining social license for these projects. As seen in Australia, particularly in regions like the Hunter Valley and Bowen Basin, transitioning from coal-based energy to renewables can lead to significant social and economic disruption. Local communities often have concerns about job losses, environmental impacts and the cultural significance of land. In many cases, sites chosen for pumped storage are located on land that is sacred to Aboriginal and Torres Strait Islander communities, requiring investment in engagement and negotiations.
- Investment and Contracting Models: Pumped storage projects are capital-intensive, often requiring significant upfront investment. In Australia, government schemes like the Capacity Investment Scheme and Long-Term Energy Service Agreements (LTESAs) are helping to reduce financial uncertainty and attract private investment. However, the regulatory framework must be flexible and conducive to long-term project development.
Challenges for pumped hydropower
ESG Framework for Managing Risks
One approach to addressing these challenges is through the lens of Environmental, Social and Governance (ESG) frameworks. This model can be particularly useful for managing the complexities of pumped storage projects by ensuring that technical, environmental and social considerations are integrated into the project’s design and execution.
For example, from a governance perspective, clear procurement strategies and robust contracting mechanisms are essential to manage costs and ensure the success of these projects. From an environmental standpoint, using regenerative design principles can help mitigate the impact of large infrastructure projects on local ecosystems. Finally, from a social perspective, engaging with local communities, respecting cultural heritage and ensuring that new jobs are created in renewable energy sectors are crucial for securing the social license needed to move these projects forward.
ESG Framework Model
Global Opportunity for Growth
As SMEC continues to expand its presence in the UK and Europe, the company is well-positioned to contribute to the global pumped hydropower sector. The success of pumped storage hydropower in Australia offers valuable lessons for the rest of the world, particularly in managing site selection, regulatory issues and community engagement. The growing recognition of the importance of pumped storage in Europe further underscores the global relevance of these projects.
With its extensive experience in large-scale infrastructure projects and expertise in hydropower, SMEC can play a significant role in supporting the development of pumped storage systems in both Australia and Europe. By leveraging its growing presence in these regions, SMEC can contribute to the transition to renewable energy, ensuring a stable, sustainable and secure energy future for all.
Find out about SMEC’s expertise in pumped hydro storage and how our experience can support your projects.
References
- European Commission. (2020). “Pumped Storage Hydropower: Key Facts and Trends.” European Commission Energy.
- International Hydropower Association. (2023). “Pumped Storage in the Global Context.”
- Australian Energy Market Operator. (2024). “Integrated System Plan.”
- Queensland Government. (2024). “Queensland Energy and Jobs Plan.”
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