Pumped Storage Hydro

Report analyzes proposals to add pumped hydro at mine sites in Australia

Report analyzes proposals to add pumped hydro at mine sites in Australia
(photo courtesy IEEFA)

In Australia, pumped hydro projects are being proposed for the large holes left after open-cut mining, but new research from the Institute for Energy Economics and Financial Analysis (IEEFA) suggests governments – and taxpayers – should be wary.

The new IEEFA report highlights the technical, environmental and financial risks these projects could pose. Pumped hydro has a history of delays and cost-blowouts, and projects implemented in mine voids could also entail severe contamination risks, according to the report.

“Filling the voids: Pumped hydro proposals could see taxpayers financing mine rehabilitation” also warns of the possibility these projects would effectively set a precedent of governments partially funding the rehabilitation of mine sites – a responsibility that should sit with the mine operator.

“Rehabilitating mine sites is a legal obligation miners enter when their mining licenses are approved, and they should be budgeting for this ahead of the mine’s closure,” said Anne-Louise Knight, lead analyst, Coal Industry Australia and the report’s author. “IEEFA’s research raises concerns that proposals to build pumped hydro in these final voids may potentially be a way to get governments to share some of that financial burden, with taxpayers ultimately losing out.”

Along with the risks, IEEFA’s research found these projects are unlikely to deliver significant benefit for Australia’s energy system. While large-scale, strategically placed pumped hydro such as Snowy 2.0 could play an important role providing deep energy storage to complement renewable electricity generation, most of the schemes proposed for mine voids only offer medium-duration storage. Analysis of projected storage requirements in the National Electricity Market (NEM) suggests demand for these specific projects will be limited and might be met more competitively by alternative technologies.

The report argues that if final voids are permitted to be left after mining, Australia needs a clearly defined policy that sets out the obligations of mining companies to rehabilitate or repurpose mine pits, to avoid significant financial burden on the taxpayer.

IEEFA examines issues related to energy markets, trends and policies. The institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

Hydro Review reported in July 2024 that the NSW Government declared six renewable energy projects to be Critical State Significant Infrastructure (CSSI) given their potential significance to the economy, including three pumped storage hydro projects. The three proposed pumped hydro projects will provide reliable energy generation, capacity and dispatchable power when solar or wind resources are unavailable, the government said. Two of the three are at mine sites.