RISC refutes RepuTex claim

RISC partner Martin Wilkes disputes analysis firm RepuTex’s report suggesting pumped hydro will replace gas as a transition fuel on the way to a renewable-led energy mix.

Helen Clark | 13 October 2017 | Energy News Bulletin

“I’d be more inclined to take the view expressed by Deutsche Bank – and re-iterate the point that most likely both will be needed,” Wilkes told Energy News.

Wilkes was referring to what the bank’s senior research analyst John Hirjee said at a recent Australian Financial Review energy summit: there is no winner yet, and still plenty of room for gas.

“I still think gas will be important and be a transitional fuel,” he said.

Deutsche Bank is one of the largest funders of renewables projects globally, arranging roughly €3.9 billion (A$5.9 billion) in project finance for projects generating more than 3480 megawatts.

RepuTex’s Goodbye Gas, Hello Pumped Hydro, released this week, looks at the case for Snowy 2.0 and the extension of AGL Energy’s New South Wales’ coal-fired Liddell power station and suggests that pumped hydro and not gas should be the logical choice to better transition Australia to renewables.

This is in contrast to much received wisdom which sees gas power increasingly important as still-intermittent renewables make up a larger share of the energy mix.

Wood Mackenzie analyst Saul Kavonic wrote last month that there might be a need for gas backup in a renewables market until 2035, even if the price of batteries and battery charging came down.

In fact, even supposing a Wood Mackenzie forecast that if all planned renewables projects went ahead gas demand for power generation in South Australia could drop by 70% by 2025, it would still be necessary as a backup source.

And that 70% figure would still only account for a small proportion of domestic gas use on the east coast.

The new report suggests that investment in Liddell might deter renewables’ investment and also favour expensive gas, squeezing a tight energy market tighter.

It favours pumped hydro and the Snowy 2.0 plan, the multibillion dollar extension to the Snowy Hydro scheme that began in the 1960s and has been influential as far away as Laos.

“Critically, considering increasing gas prices, pumped hydro energy storage is able to increasingly serve as a lower cost substitute for gas, with the added advantage of complementing low-cost variable renewable energy through increased flexibility and system balancing, rather than displacing it,” RepuTex said.

It believes that “the outlook for gas to play a larger role in the energy mix is dimming,” setting out a contrarian point not even many in the renewables industry might agree with at the moment.

The increased gas price is another reason given.

Pumped hydro will be an alternative technology that will fill the role envisaged for gas  in transitioning the market to renewables “by combining the need for fast acting capacity with the flexibility of operating at a variety of generation levels.”
However, Perth-based Wilkes’ take is more nuanced.

“Pumped Hydro is a better large scale storage option in my mind than batteries, but it suffers from the same issue that it is a “no gain” addition to the system,  it doesn’t add capacity it merely shifts it from being non-dispatchable to dispatchable (which is good),” he said.

He said this means in addition to storage further generating capacity also must be built.

“You have to be able to cater for the use of electricity, and then in addition you have to have capacity that can be used to ‘charge’ the storage,” he told Energy News.

It might be petty to note, but a precis of the report also suggests that there is now 13gigawatt of rooftop solar capacity in Australia, when government body the Australian Renewable Energy Agency reported at the August it due to 6GW.

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