Is hydropower the key to our net-zero future?

Strathgordon hydroelectic dam in south-west Tasmania (hydro tasmania profit)
Strathgordon hydroelectic dam in south-west Tasmania (Image: Shutterstock)

After serving as the backbone of the Australian power system for the past 100 years, a new report says hydropower is poised to play an integral role in supporting the integration of increased wind and solar generation in the National Electricity Market.

The Clean Energy Council has released a new report, Hydropower: The backbone of a reliable energy system’, which outlines the enormous potential as well as the key challenges that will need to be overcome if we are to deliver the 19GW of dispatchable energy that will be needed by 2040 to replace retiring coal-fired power stations.

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Hydropower can rapidly ramp up its production to meet peak demand when the sun sets and solar output recedes. As the market continues to install higher shares of renewable energy, particularly solar, these kinds of fluctuations can be expected to increase in magnitude, with hydropower playing an increasingly important role in maintaining energy supply reliability.

“Hydropower is one of the most mature forms of renewable generation,” Clean Energy Council chief executive Kane Thornton ssays.

“Its large energy storage capability and the essential system services it provides leave it ideally placed to thrive in a 21st-century energy system to complement the rollout of wind, solar and battery storage and drive the reliable and secure decarbonisation of the Australian energy sector.

“While these projects typically have a high upfront capital cost, investors are willing to spend the money to build new hydropower and to refurbish existing assets. However, to make this investment worthwhile, investors need to know that these projects will recover their investment and receive revenue for the value they provide customers and the energy system.

“Unlocking the full potential of hydropower, therefore, requires market reforms that incentivise these services as well as strategic investment that underpins new investment and critical network expansion and augmentation to ensure strong connection and access to the energy grid.

The International Hydropower Association estimates that the use of hydropower instead of fossil fuels for electricity generation has helped to avoid the emission of more than 100 billion tonnes of carbon dioxide in the past 50 years.

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The first Australian hydropower plant was developed in 1895, with most assets built between 1951 and 1996. There is currently around 8.5GW of hydropower capacity in operation across Australia, providing approximately 6.4 per cent of total energy demand in 2020. 

Earlier this month, the New South Wales Government revealed its $50 million Pumped Hydro Recoverable Grants Program had received 11GW of proposals or over five times the 2GW it needs to support wind and solar projects within the state’s renewable energy zones. Thornton says that this is further evidence of strong investor appetite under the right policy settings.

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