Australia is making a significant push into pumped hydro storage, commonly referred to as "water batteries," to support its shift towards renewable energy. The state-owned Snowy Hydro plant is at the forefront of this initiative with its A$5 billion ($3.5 billion) expansion, Snowy 2.0, which aims to provide reliable power as the country moves away from fossil fuels. Pumped hydro, a century-old technology, currently accounts for about 95% of global energy storage linked to electricity grids and is seen as crucial for bridging the gap created by intermittent wind and solar power.
Snowy 2.0, expected to be completed by 2025, will add 2,000 megawatts of generation capacity and quadruple electricity storage, enough to power 500,000 homes for a week. This upgrade, involving an underground power plant and 27km of tunnels, would make it one of the world's largest pumped storage facilities. Snowy Hydro estimates its storage costs are up to 60 times cheaper per megawatt-hour than the largest lithium-ion battery farm in South Australia, highlighting its long-duration storage capabilities compared to batteries, which typically offer short-term solutions of a few hours.
Despite the ambitious plans, critics like Tony Wood from the Grattan Institution express concerns that Snowy 2.0 could dominate the storage market, crowding out more cost-efficient pumped hydro projects and other competing technologies such as lithium-ion battery farms and solar thermal storage. David Leitch of ITK Services Australia also questions the demand for such vast storage and whether Snowy 2.0 will be commercially viable, suggesting it could become a "commercial white elephant" due to its high cost relative to rivals and competition from increasingly cheaper lithium-ion batteries.
Energy experts agree that a mix of technologies, including pumped hydro, lithium-ion batteries, solar thermal, enhanced transmission networks, and demand management, will be necessary to maintain grid stability. While lithium-ion batteries are becoming cheaper and offer rapid deployment and quick response times, making them ideal for short-term outages, their shorter lifespan (14-18 years) contrasts with pumped hydro's much longer operational life (up to 70 years). Paul Gleeson of Aurecon emphasizes that these technologies are complementary, with pumped hydro providing the greater capacity needed as more renewable energy integrates into the grid. However, an additional A$2 billion investment in Australia's high-voltage transmission network is required for Snowy 2.0 to be fully effective, a cost likely to be passed on to consumers.
