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Power deal expected to help underwrite massive pumped hydro scheme

Business

The State Government was likely to be a major underwriter of a $2.9 billion dam and pumped hydro project with a heads of agreement on an electricity offtake expected to be signed soon.

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Bowen River Utilities is the proponent behind the massive Urannah Dam project in central Queensland which will include a major irrigation scheme and two pumped hydro generators that would have an eight-hours of storage capacity or up to 1.4 gigawatts of dispatchable power. Wind and solar are also envisioned but not a part of the environmental impact statement that was delivered to the State Government recently.

The project fits neatly into State Government plans for a major investment in pumped hydro. It announced last month that it was investigating several sites for the development of pumped hydro to add to the favoured Borumba Dam scheme, near Gympie.

The Australian Energy Market Operator also announced this week that investment was “needed to treble the firming capacity provided by new low-emission firming alternatives that can respond to a dispatch signal, with efficient network investment”.

“The most pressing need in the next decade (beyond what is already committed) is for dispatchable batteries, pumped hydro or alternative storage to manage daily and seasonal variations in the output from fast-growing solar and wind generation,” AEMO said.

But the Urannah Dam project would also have significant taxpayer input. It has already received $483 million from the Federal Government and was line for another $35 million in development funding from the State Government.

Pumped hydro works by having an upper and lower reservoir. During demand times the water is directed to turbines below the upper reservoir. When electricity is cheaper during the peak generation of solar in the afternoon, the water is pumped back up. Urannah’s planned solar and wind projects would effectively be used for that pumping to the higher reservoir.

Chief executive James Benjamin told InQueensland a binding heads of agreement with a Government-owned corporation on offtake was likely to be signed within months. An equity stake was also possible.

“My primary objective is an agreement on energy,” he said.

Private equity from sovereign wealth and infrastructure funds was likely.

“We have had to fight off a group of investment houses that want to take it,” Benjamin said.

“We have de-risked the pumped hydro. Government approvals are now the only risk.”

He said Urannah had the capability of being a critical component of the Government’s energy plans because there were very few sites in the state that were feasible.

The project was expected to have 650 jobs in construction over four years and add $5.6 billion to the Queensland economy. The cost benefit analysis showed a $1.07 return for every $1 invested.

Financial close was scheduled for next year and construction would start in 2024.

Commissioning of the first pumped hydro generator would occur in 2028 to coincide with the retirement of Callide B coal fired unit. The second unit would come on line in the 2030s to coincide with the retirement of the Gladstone power station.

The two units would have a combined capacity of 900 megawatts.

“The beauty of its location is that it can keep the lights on in north Queensland,” Benjamin said.

 

 

 

 

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