Address to the Australian Energy and Battery Storage Conference
The Honourable Malcolm Turnbull AC
7 March 2023
Last year I stood in front of this conference and talked about what I believed was the ignored crisis within the energy crisis - the lack of Long Duration Energy Storage.
I said there was no time to waste. We have the technology to get the job done. Now we just have to get on with it.
So how have we fared?
As I will explain - not nearly enough. There are only two Pumped Hydro schemes under construction - the same two there were three years ago. And not one other project is permitted to start construction. We have to accelerate development, approval and start building.
In some respects we are doing better: a new federal government is more committed to the clean energy transition. The new Energy Minister, Chris Bowen, has secured support for the introduction of capacity payments which will provide support for long duration storage in general and pumped hydro in particular.
In this state of NSW, the Liberal Government’s energy policies are not politically contentious, other than at the margins, and the Labor Opposition led by Chris Minns has broadly endorsed them. Matt Kean has been a creative and progressive energy minister and the LTESA programme is one of, if not the, best government policy I have seen to support the private sector in the construction of long duration storage.
[At a practical political level, I might add that while the right wing media loves to slam Mr Kean for being too climate conscious and generally progressive, if the Teals do not perform as well in the State election as they did in the federal election last year it will be in very large part due to Mr Kean.]
So you could say that both on the political and policy fronts the climate for LDES in Australia has improved.
And there are lots of projects being proposed and planned.
I should note that my own team have been working on several wind and pumped hydro projects . Tom Nielsen and Jason Gibson have joined Turnbull Renewables and we are putting our own resources into the clean energy challenge.
But right now there are still only two pumped hydro projects being constructed in Australia - the same two that have been the only ones being constructed for more than three years - Snowy Hydro 2.0 and the Genex project at Kidston in Queensland.
From reviewing information provided by AEMO, as well as state planning websites and public announcements, it appears that there are 15 active and announced pumped hydro projects being developed in Australia.
This consists of:
2.3 GW in construction
3.6 GW in planning
10.2 GW announced
This amounts to 16 GW of pumped hydro in the current pipeline in Australia, but with the bulk of this capacity in the very initial stages.
In total these amount to 601 GWh of storage of which 350 are for Snowy 2.0.
Apart from Snowy and Genex none of these projects are actually permitted and approved for construction - four are going through the planning process Big -T and Mount Rawdon in Qld and Oven Mountain and Central West in NSW. The rest are yet to begin that process in a formal sense but hopefully will do so shortly.
But, and I repeat, only two are being built and not one of the others is approved and ready to start construction.
You can have all of the good intentions, all of the great policies, all of the political harmony on climate policy (at least in this State) but that is not a substitute for actually building the infrastructure we need.
And while the domestic politics has improved, the global context has got a lot worse.
Russia’s invasion of Ukraine not only sent gas bills skyrocketing, it compounded the supply chain crisis that was triggered by the global COVID-19 pandemic.
Infrastructure projects around the world, not only in Europe and the United States but here in Australia too are dealing with a surge of supply chain risks, higher interest rates and severe labour shortages. It’s not surprising that Australia has experienced a sharp rise in construction sector insolvencies over the past year.
As a consequence the task of getting long duration energy storage projects financed and into construction has become a lot more difficult over the past year.
Both Snowy 2.0 and Genex have faced tunneling problems. Snowy’s temporarily stationary TBM has been the subject of quite a bit of media frenzy.
Delays in the construction of critical infrastructure are a problem and regrettable, but they are hardly surprising or uncommon. Indeed they are the norm and in that context may I commend to you all Bent Flyvberg’s latest book “How Big Things Get Done”
The real issue, which to his credit Andy Blakers has regularly raised, is not that several tunneling projects have encountered difficulties but rather that we are not building nearly enough pumped storage quickly enough.
We have to recognise that once we phase out burning coal we will, in Australia, have little or no continuous generation at all. We don’t have nuclear generation and we don’t have big run of river or continuously generating hydro (with the exception of Tasmania).
Next month the final 3 turbines at Liddell power station are to be permanently shut down. This represents the first major domino in the latest series of upcoming coal power station retirements occurring much faster than was previously anticipated. AEMO’s Step Change modeling indicates 14 GW of coal-fired generation is likely to retire by 2030 and all coal capacity could close as early as 20430.
But we have probably the world’s best endowment of solar and wind.
So to firm that we need a lot of storage.
By 2050, AEMO’s most likely Step Change scenario would call for over 60GW of firming capacity. This could be provided by utility-scale batteries, hydro storage, gas-fired generation, smart behind-the-meter batteries or VPPs and, potentially, vehicle-to-grid (V2G) EVs.
Andrew Blakers from ANU suggests that of the 60GW roughly 15GW or 20GW will be pumped hydro technology. Batteries and demand management will take care of the rest - you can see we are a long way short of delivering that.
The 16 GW of projects at various stages referred to earlier could potentially meet the bottom end of Professor Blakers’ suggested future market demand needs - but in all likelihood, many more projects will need to be developed, permitted and constructed.
The fact remains that unless we get moving on building long duration storage solutions, we will be left with a lack of capability to provide continuous power to the end users as thermal coal is phased out. This will result in a national energy system heavily reliant on the production and burning of gas, which is not only a greenhouse gas emitting fossil fuel, but also subject to dramatic price volatility over which we have no control - as we have seen in the last year..
Energy demand increases & climate impacts
Historically in Australia our economy has grown much faster than energy demand which itself has remained fairly flat. Increases in residential and other demand consequent on a rising population have been offset by the closure of energy intensive industries and in those that remain more energy efficient processes.
So our challenge has been to replace the fossil fuel fired generation that is retiring with clean generation. In the developing world the challenge has been to make a switch to clean generation and at the same time accommodate rapidly growing demand for electricity.
However, now in the developed world we can look to a similar challenge. Energy demand could easily triple when we consider the electrification of the economy including most forms of transport, decarbonising energy intensive industries like steel and aluminum manufacturing not to speak of the enormous amounts of green energy required to produce green hydrogen.
According to the IEA global electricity demand growth will average 3.2% in 2024-2025 surpassing our pre-pandemic years.
Over the next three years, global electricity consumption added each year is roughly equivalent to that of the United Kingdom and Germany combined. More than half of the increase will come from China. The remaining growth will largely take place in India and Southeast Asia.
By 2025, for the first time in history, Asia will account for half of the world’s electricity consumption and one-third of global electricity will be consumed in China.
Climate Change is now impacting energy grids around the world. Both demand and supply of electricity is becoming increasingly weather-dependent as a result of extreme conditions.
The impacts of climate change on energy security will require increased attention and ingenuity.
Last year, the central and eastern regions of China were hit by heatwaves and drought, causing demand for air conditioning to surge at a time when hydropower generation in Sichuan province was reduced.
India also experienced heatwaves resulting in the country’s highest ever peak in power and severe winter storms in the United States triggered massive power outages.
In the coming years we will need to plan for not only singular extreme weather events but cascading extreme weather events.
Climate change is already impacting the stability of energy grids around the globe and we know both of these trends - increased demand and extreme weather events - will only accelerate.
It’s a highly volatile environment and one that underscores the urgent need for increased energy security and resilience. Two things that, once we get them built, pumped-hydro technology will deliver for decades.
Conclusion - What’s needed in Australia
The crisis of long duration energy storage remains.
If we don’t efficiently develop and start building the long duration storage we will undoubtedly need in the coming decade, governments will fail to deliver a clean energy transition that is secure, reliable and affordable.
Governments pursuing a market strategy to bring long-duration-storage online must recognise that the business case for pumped-hydro is not there yet especially in energy only markets.
Governments around the world have recognised this in NSW and now more recently in Australia, India and the United States.
Investors will require long term revenue visibility.
Policies like the LTESA designed by and now managed by Paul Verschuer and Brad Hopkins of AEMO Services are world class but we need more market drivers to secure investment and overcome the global supply chain constraints.
The NSW energy roadmap Roadmap identifies more than $32 billion of private sector investment is required by 2030 to deliver 12 gigawatts of new renewable electricity generation and 2 gigawatts of long-duration storage, such as pumped hydro. in addition to Snowy 2.0.
That’s only seven years away.
Governments need to urgently address the lack of progress to construction on pumped hydro. If the private sector is expected to build it (as in NSW) then not only does there need to be a viable financial model but planning and permitting needs to be accelerated - I don’t mean taking short cuts, but if you take the climate crisis seriously (and everyone claims they do) then you cannot treat the construction of vital clean energy infrastructure as business as usual.
There will no doubt be a welter of good intentions, policies, committees, clean energy czars and impressive presentations. But the only thing ultimately that will count is construction of the storage that we need. With it we can be a fully renewable energy economy.
We have every resource to get there except for two. We have the wind, the sun, the technology, the money, the land and the water. We need expedition - we can provide that if we have the will. But the one resource we have less of every day is time.
So let's get on with it.