The challenges and opportunities around long term energy storage – insights from Genex CEO James Harding

For Genex Power – the first private company in Australia to develop pumped hydro – the business case for large-scale energy storage systems (LESS) has always been clear.

Given the high penetration of solar in Queensland, Genex’s various LESS projects throughout the state are well placed for energy arbitrage – enabling the operator to bank large volumes of surplus power and supply the evening peak.

This and its access to the frequency control ancillary services markets represent just a few of the company’s highly profitable revenue streams.

But while Genex’s business case may be relatively straightforward, its logistical strategy is often not, explains Chief Executive James Harding, ahead of the Australian Energy & Battery Storage Conference, hosted by Informa Connect.

Working with large swathes of remote land – much of which is on the fringes of the grid – the company has had to be strategic about where it places its storage assets.

That, and limitations around the local topography, make for a complex foundation on which to build large-scale projects.

“We have always seen a really good business case for large scale storage, driven by the multiple revenue streams,” said James. “In Queensland, energy arbitrage is particularly fruitful, given the high penetration of commercial and rooftop solar and the resulting power surplus during the day. As storage operators, we are in the fortunate position of getting paid to store this surplus and re-generate it when needed.

“That said, we have to be strategic about where we place our assets.”

Strategic positioning

To get its positioning right, Genex looks at Queensland in three segments – North, Central and South.

Being on the edge of the grid, North Queensland is a weaker part of the network, but a high yielding solar hotspot – a logical location for deep storage, James says.

“We are developing our 250MW Kidston pumped storage hydro project (K2H) in North Queensland to make use of its high solar and wind penetration and simultaneously provide the area with system strength.”

South Queensland is a stronger part of the network and home to big load centres. Central Queensland serves as a strategic cross roads between the weaker grid/high renewable penetration to the North, Gladstone on the coast, and the stronger network and load centres to the South.

“Our Bouldercombe battery project is located in Central Queensland and plays a very strategic role in the network, by providing arbitrage and ancillary services,” James said.

“We are also in the early developmental stages of a very large battery asset in Bulli Creek – the closest substation to the NSW interconnector. This will play an equally strategic role, by absorbing power in a very strong part of the network and dispatching it to the load centres of South QLD and across the border as required. The arbitrage potential of this asset it significant.”

Navigating the local topography

While Genex is making strong progress in developing a portfolio of storage assets, its ongoing operations have not been without setbacks.

Eighteen months into the development of the K2H Project, the company encountered a high pressure water body, blocking the excavation path of its underground access tunnel.

“The access tunnel will extend 1.5 km to an underground power house, but we hit the water 1 km into excavation,” James said.

“We spent some time investigating what this unexpected feature was and whether we could push through – but the conclusion was to complete the access tunnel in a different alignment and work has since resumed on this basis.”

The local landscape has, however, offered advantages. To construct its K2H project, Genex purchased and made use of a former gold mine – the topography of which James describes as the “perfect fit” for a pumped hydro operation.

“The mine consisted of two adjacent big pits which were filled with water when the mine was closed. We are now constructing tunnels and water shafts and installing turbine equipment. The facility will host two reversible machines that pump water into the upper reservoir and then reverse into turbine mode to generate electricity.”

Battery infrastructure by comparison is relatively easy to construct, with complexities only anticipated once batteries come on site.

“So far we haven’t had any issues with our battery asset. They are quite straightforward from a construction point of view. Installing and commissioning the batteries on the network will likely be the only phase of the project that presents particular challenges,” James said.

Battery versus pumped hydro

Alongside positioning and topography, one of the key challenges Genex faces in optimising its operation, is deciding on which technology to prioritise for investment.

James describes Genex as a “tech-agnostic” company and says he is happy to pursue any up-and-coming LESS technologies that meet its requirements.

However, even existing LESS assets come with a mix of advantages and drawbacks.

“Pumped hydro is highly dependent on the location and topography and needs to be an enormous operation to be economically viable. The construction process is also much lengthier – but the storage potential is obviously excellent,” James said.

“Batteries, being modular, can be dotted around the network more easily in strategic locations – but of course their storage capacity is more limited.

“Ideally we would like as many of each asset as possible, but resources will only go so far.”

Soon, supply chain constraints may also pose a threat to battery development. Reserves of lithium – one of the primary battery materials – are expected to dry up by around 2025 and reach chronic shortages by 2030, unless recycling operations ramp up.

James, however, is less concerned than others about the future health of the battery supply chain.

“Industry has consistently turned its attention to getting problems like this solved. We are seeing notable progress in the development of alternative materials, such as chemical flow batteries which, incidentally, offer deeper storage than conventional lithium. At Genex, we are quite excited about alternative storage technologies.

“I am confident that with the right investment incentives, we will find a way to cater for the insatiable storage appetite we currently have as a nation.”

James Harding is Chief Executive of Genex Power. He is due to present at the Australian Energy & Battery Storage Conference on 7-8 March 2023 at the Hilton Sydney.

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