AGL is working with Japanese firm Idemitsu to transform a Muswellbrook coal mine into a pumped hydro storage power plant to replace the energy lost when AGL closes the Liddell power station in 2022.
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“AGL is investigating the feasibility of establishing a pumped hydro project in the Upper Hunter,” the company told Fairfax Media.
“Bringing energy storage of this kind to the market puts downward pressure on power prices.”
The construction of a pumped hydro storage facility, using the Japanese firm's Idemitsu's soon to be closed Muswellbrook Coal mine, is understood to potentially cost about $400 million.
AGL and Idemitsu will carry out a feasibility study into its viability.
It is part of AGL’s $1.4 billion three-staged plan to replace the electricity that will be lost when the Upper Hunter-based Liddell power station shuts down in 2022.
The pumped hydro storage facility plan brings AGL’s total Liddell replacement investment to potentially about $1 billion, however, it is yet to commit to all stages of its replacement, which includes constructing new solar, wind, batteries and gas-fired generation.
Idemitsu’s Muswellbrook Coal mine, located about 15km from the Liddell power station, is likely to be closed within the next three years, putting a timeline on a pumped hydro storage facility’s construction.
AGL and Idemitsu are understood to have been planning a formal announcement of the pumped hydro plan in coming weeks, along with Muswellbrook Shire Council which had worked for months drumming up support for the proposal.
An errant media release appeared briefly on Idemitsu website - excluding the names of those attending - before being pulled.
AGL has drawn the ire of the Turnbull government and the NSW Minerals Council over its plans to shut the Liddell power station in 2022.
One person familiar with the pumped hydro project raised concerns that efforts would be made to torpedo the hydro scheme.
Upper Hunter MP Michael Johnsen supported AGL’s development plan but said coal still needs to play a role in Australia's energy future.
“Liddell’s closure is and always was going to happen due to its practical life,” he said.
“The proposal serves two purposes; it’s a good use of the final void from mining and provides energy.
“Using old pits for such energy generation is a good idea but we need more base-load coal-fired power stations to build increased capacity and lower prices for families and business.”
The groundwork for the new project comes days after AGL rejected an offer from rival energy company Alinta to purchase Liddell.
AGL said the $250m offer undervalued the power station and it would instead remain focused on building a suite of renewable power to replace the 1680 megawatts lost when Liddell shuts down.
Federal Environment and Energy Minister Josh Frydenberg slammed AGL’s decision at the time, calling it disappointing, adding that AGL needs to “financially commit to all other stages” of the plan.
Mr Frydenberg was approached for additional comment.
One issue AGL may face in turning a coal mine into a pumped hydro storage operation is that the mines’ pits are often not deep enough to have significant levels of water flowing, at only around 120m deep.
There is also the issue of coal dust in the water, which would make it more corrosive on the pumping equipment during continuous operation.
This is not the first former mine which has been turned into a pumped hydro storage operation.
Genex’s Kidston project in Queensland, dubbed the state’s own Snowy 2.0, has already begun construction.
It generates power from water filling the abandoned Kidston gold mine, northwest of Townsville in Queensland.
With mine pit depths of about 300m – more than twice that of Muswellbrook Coal – Kidston has a power potential of 250 megawatts.
- SYDNEY MORNING HERALD
