Pumped hydro more expensive than batteries: why the winner is unclear

Previous post ended with the conclusion of Brakels’ article that the “winner is unclear”. That is quite a surprising conclusion of an article praising the strengths of the batteries while downplaying the weaknesses. These are the two reasons why Brakels thinks that the winner is unclear (my emphasis):

But because Snowy Hydro 2 may come in at less than the $10 billion or so I expect and because I can’t be certain the additional return from the battery setup will be enough to replace them when they fail, I can’t pick a winner.

The second argument is the most interesting. That statement looks rather cryptic and the meaning depends on the definition of the words “return” and “fail”.

“Return” could mean financial return and “fail” could mean end of economical life (additional financial return of the battery/solar scenario is not enough to replace the installation after its economical life). I will explore this meaning in the following post.

“Return” could also just mean output and “fail” could mean when the additional output of the battery/solar scenario is insufficient (additional output of the setup is not enough to fill in demand and then there would nothing to replace it with). If that is what he means, then he is rightfully pointing to the fatal flaw in his calculation:

Dimensioning is not done using averages

His calculation shows that AU$5,000 could pay for 1 kW of Snowy Hydro 2.0 and this would deliver on average 4 kWh daily, compared to the battery/solar scenario where the same budget could buy 4 kW of batteries with a storage capacity of 5.16 MWh. Therefor coming to the conclusion that “while its total energy storage capacity is much less, it can supply more than the average amount of energy $5,000 worth of Snowy Hydro 2 is expected to”.

This comparison is obviously not apple-to-apple: he is comparing the average daily output of Snowy Hydro 2.0 (4 MWh) with the maximum storage capacity of the battery setup (5.16 MWh). That is not even the worst part of it. The fatal flaw in his calculation is that storage systems are not dimensioned using their average output, but the maximum storage capacity to meet demand at all times.

That 4 kW and 5.16 kWh could theoretically handle 4 kWh per day, but this is not how electricity grids work. An average of 4 kWh means that on some days the setup will provide less than 4 kWh and other days more, so that 5.16 kWh of storage capacity doesn’t give much room to meet additional demand. Snowy Hydro 2.0 can however provide waaaaaay more than 4 kWh if needed. Brakels estimated that the operating capacity of the 2 GW turbines is 40 GWh, so if that is the case, then that 1 kW capacity of Snowy Hydro 2.0 could potentially deliver 20 kWh.

That is not the maximum value of the Snowy Hydro 2.0 though. As seen in the report that Brakels links to (see the first post in this series), the maximum storage capacity is calculated as being in the range of 40 to 200 GWh (depending on the operation of the other reservoirs) or even higher (but then water would be lost and not recyclable). If that is correct, then that 1 kW capacity of Snowy Hydro 2.0 could produce a maximum of 100 kWh (or more when using water in a non-recyclable way). The maximum of 5.16 kWh of the batteries will pale in comparison to that.

That higher storage capacity is a huge advantage when having to balance intermittent power sources. Snowy Hydro 2.0 could produce potentially way more than the 4 kWh or could produce that output over several days without recharging. This is where the real strength of Snowy 2.0 lies and this kind of performance is not possible in the battery/solar scenario. The 4 kW of the battery setup could not provide more than 5.16 kWh (only if is completely charged and then completely discharges, which is unlikely to be possible) and if supply by solar and wind fails for several days, then it will pile up shortage after shortage until it has the chance to charge sufficiently again.

Let’s continue with the other reason why he thinks the winner is unclear:

The inflated price tag of Snowy Hydro 2.0

Brakels pulled that price tag out of thin air. He inflated the contracted AU$5.1 billion to AU$7 billion by including transmission upgrade cost and then arbitrarily added another AU$3 billion, resulting in the AU$10 billion he used in his calculations.

The reason why the transmission upgrade cost was included in the Snowy Hydro 2.0 cost, but not in the battery cost, is that batteries could be put everywhere:

Because batteries can be located where it’s convenient in whatever quantity is desired, they can lower transmission costs. They are often used to avoid the need to upgrade transmission capacity. For this reason, I am not making the $5,000 worth of Hornsdale batteries pay for additional transmission while it is included in the Snowy Hydro 2’s $5,000 worth of capacity.

I can understand this reasoning and I would have no problem with it when he would directly compare hydro with batteries. That is of course not what he did. He compared Snowy Hydro 2.0 with Hornsdale sized batteries plus solar or wind. Batteries could be placed everywhere, but that is not the case for solar farms, concentrated solar installations and wind farms. More, I would expect the transmission upgrades for intermittent sources to be intrinsically more expensive, this because of the large space requirements due to the low energy density of solar and wind.

An argument could be made for decentralized solar, then batteries could potentially be used to balance out the production surge around noon and smear it out over the evening (although it might be safer to strengthen the grid in order it to handle these surges). I however don’t think that is what is meant in the article. One of the advantages of the batteries/solar scenario that he gives is that it could gain from selling the surplus solar production to the grid in order to lower the total cost of the battery/solar setup, so he is clearly not talking about a cohort of small solar panel owners.

Recalculating for AU$7 billion using his flawed calculations would give AU$3,500/kW Snowy Hydro 2.0 and the budget for 1 kW of this could pay for a battery capacity of 3.93 kW with a storage capacity of 5.07 kWh. That is even less room for above average demand. Buying some solar within that budget will lower the storage capacity even more and will have less additional advantages.

Recalculating for 5.1 billion would give AU$2,550/kW Snowy Hydro 2.0 and the budget for 1 kW of this could pay for a battery capacity 2.87 kW with a storage capacity of 3.7 kWh. Meaning that it is not capable of meeting the average demand, let alone above average demand.

So yes, if the price ends up below 10 billion, his comparison definitely risks to fall flat.

Even if we use his own flawed calculations, it only provides a fragile win for batteries. Just wiggle somewhat with Brakels’ assumptions and the outcome could fall in favor of Snowy Hydro 2.0.

In an attempt to justify that the battery scenario is nevertheless feasible, Brakels starts a new calculation….

*Sigh*

But that will be something for the next post.

2 thoughts on “Pumped hydro more expensive than batteries: why the winner is unclear

  1. Pingback: Pumped hydro more expensive than batteries: battery replacement(s) – Climate- Science.press

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