Renewable energy and storage using

WaterNSW assets

Industry briefing session summary

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Introduction and Important Information

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As part of WaterNSW’s EOI process for Renewable Energy and Storage

Opportunities, an Industry Briefing was held on the 2nd May 2018 to outline:

• the context and objectives of NSW Government and WaterNSW;

• a parallel exercise conducted by Australian National University (ANU) and Arup

to develop detailed maps outlining areas of high pumped hydro potential; and

• an overview of WaterNSW assets.

This document outlines the content of the Industry Brief for participants’ informational

purposes.

WaterNSW and the Department of Planning and Environment (DPE) make no representation or warranty, express or implied, with respect to the information included in this document, or any information

which may be provided in association with it.

To the maximum extent permitted by law, neither WaterNSW and DPE nor their advisors (nor their employees, contractors, agents, related companies, agencies or bodies, directors or officers) accepts, and

each expressly disclaims, any liability in connection with the information presented in this document, including, without limitation, any liability arising from fault or negligence for any errors or misstatements

in, or omissions from, any information provided to a Participant, or in the form of any direct, indirect, consequential or other type of loss.

NSW energy market context and NSW Government objectives

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1 NSW Department of Planning and Environment2 ibid3NSW Department of Planning and Environment, calendar year 2016

Energy generation is changing in NSW1

• Over the past two years, wind generation in NSW has

more than doubled and total generation from small and

large scale solar PV systems has increased by around

87 percent.

• There is a need continue the diversification of supply,

and increase energy security and reliability.

• Renewables will continue to grow, as supply changes

from a baseload and peaking system, to a system

dominated by variable generation, complemented by

dispatchable renewables such as pumped hydro,

bioenergy, and demand response.

Power stations are expected to retire in NSW2

• NSW is expected to lose 10,000 MW of traditional

capacity over coming 2 decades.

• Liddell Power Station is likely to be the next significant

withdrawal from the market in 2022.

• New generation supply will be needed to avoid supply

shortfalls.

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NSW energy market context and NSW Government objectives (cont.)

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Power stations retirements are expected to leave a shortfall by the early 2030s4

• Average demand is not forecast to increase over the years primarily due to the expected increase in the installation of

rooftop solar in NSW.

• The result is that average demand is estimated to remain flat. However, peak demand will likely increase due to solar

not fully meeting peak requirements, especially after sunset (roughly 6-7pm).

Su

pp

ly &

Dem

an

d (

MW

)

4AEMO, public announcements

Note: Australian Energy Market Operator data for firm generation capacity, interconnector import capacity, distributed storage forecasts and demand forecasts; publicly stated AGL

firm generation (gas and demand response) and Snowy 2.0 projects; anticipated power station closures; and the resulting ‘new supply needed’ based on the supply-demand

imbalance plus TransGrid’s stated 700 MW reserve margin requirement for system operation.

NSW energy market context and NSW Government objectives (cont.)

55 NSW Government submission to Integrated System Plan, 2018

NSW has a significant pipeline of new generation

projects, spread through regional areas5

• As at March 2018, almost 12,000 megawatts of large-

scale renewable energy projects are either approved or

progressing through the NSW planning system, which

represents over $15 billion in investment.

In addition, NSW Government is carrying out a number of initiatives to support pumped hydro energy storage

EOI Process: Opening potential opportunities for private

sector investment in dispatchable, renewable energy

generation using WaterNSW assets.

ANU / Arup mapping exercise: Identifying high

potential regions for pumped hydro based on technical,

commercial and environmental criteria, accounting for

NSW Government policies, planning and priorities.

Regulatory factsheet: Developing a regulatory fact-

sheet, highlighting key considerations in relation to

developing pumped hydro projects in NSW.

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2

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15 billion in investment

March 2018,

almost 12,000 megawatts

of large-scale

renewable energy projects

WaterNSW background and objectives

• WaterNSW is not a NSW Government department,

rather, a State Owned Corporation (SOC) with a

legislated mandate to act commercially, and ultimately

make a return for their shareholders.

• WaterNSW is not an energy market participant, nor does

it aspire to be an active one. Existing hydro systems on

WaterNSW dams are owned and operated by third

parties.

• However, the private sector has been approaching

WaterNSW for some time asking how to get access to

assets, but retain the valuable intellectual property ‘in

confidence’.

• As a SOC, WaterNSW is still bound to public

procurement policies, and the alternative unsolicited

proposal avenue has not been overly successful for

those who have tried.

• There is also pressure emerging to be ‘multi-purposing’

WaterNSW assets and land. This is recognized, and

WaterNSW wants to be proactive in engaging with other

sectors (such as road and rail) and Governments to

realise that potential.

• To provide the private sector with a transparent public

process to gain access to WaterNSW infrastructure and

land, in a way that enables parties to explore

opportunities whilst maintaining the integrity and

confidentiality of their Intellectual Property.

• A coordinated approach in dealing with the private

sector, and to ensure WaterNSW is accessing the best

commercial opportunities, from a competitive

environment.

• To enable the private sector to invest with confidence.

• To find opportunities that are complimentary to

WaterNSW’s longer term asset strategies and which

may unlock ‘double wins’ for achieving both energy and

water security, leveraging the significant investment in

renewable energy generation.

WaterNSW’s reason for initiating this

EOI stems from a number of

converging issues

The broad renewable energy

objectives of WaterNSW are simple

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WaterNSW background and objectives (cont.)

• Provide clarity to the market on WaterNSW’s objectives

for private sector energy generation and storage,

through the use of our assets.

• Engage with the market and undertake analysis to

inform the market’s understanding of energy generation

and storage opportunities within the WaterNSW portfolio

of assets.

• Develop an approach to integrating water and energy

capabilities; to open opportunities to develop renewable

energy generation and/or storage options on WaterNSW

assets.

• Provide a better understanding of the regulatory

environment applicable to the development of these

opportunities and potential barriers faced by the private

sector in relation to these.

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Specific Objectives for this EOI and the steps to realise the opportunities, are focused on

ensuring a sustainable approach to supporting investment in dispatchable, renewable energy

• Execute an effective development strategy, assessing

viable options for further commercial negotiation and

possible exploration and development.

• Identify the WaterNSW assets that best support energy

security outcomes for the state, leading to an increase in

on-demand, dispatchable energy generation and storage

in NSW.

• Proposals must respect WaterNSW’s primary water

security, operational and dam safety obligations; whilst

ensuring existing water users and end use customers

are not adversely affected.

Market engagement process

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Opportunities

identified for further

development

Q4 CY18

Press release

April 2018

Industry Briefing

May 2018

Market sounding

May 2018

EOI development and release

Mid-CY18

ANU & Arup Mapping Exercise

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ANU and Arup are conducting a study, the output of which will be detailed resource mapping for potential pumped-hydro

sites in NSW.

Scope of ANU study

• Undertake Geographic Information

System (GIS) analysis of regions

surrounding existing NSW water assets

for locations suitable for upper or lower

reservoirs matched to these locations.

• Use technical screening criteria to filter

down to sites with high pumped hydro

potential.

Scope of Arup engagement

• Utilise ANU’s analysis of potential sites.

• Use further technical, environmental

and commercial screening criteria to

identify regions with high pumped hydro

potential.

• Refine outputs into GIS map to help

inform the industry and public.

The MCA process analyses the following characteristics:

• height to penstock ratio;

• head;

• capacity; and

• reservoir size.Technical

Commercial

Environmental

• distance to transmission;

• distance to road;

• distance to water source;

• water-rock ratio; and

• penstock length.

• heritage sites;

• distance to recreational areas;

• distance to residential receptors;

• critically endangered species;

• environmentally significant sites; and

• disused brownfield land.

Potential WaterNSW sites identified as having met criteria and

data on key asset characteristics available to public and can

be used as a initial screen for potential site by developers.

Arup Multi-criteria Analysis (MCA) Process

Outcomes

WaterNSW operates a number of assets that present opportunities for dispatchable, renewable energy generation

WaterNSW asset overview

WaterNSW asset overview

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Closed storages within Declared Catchment Areas:

• Generally all dams in Sydney metro, Blue Mountains

and Shoalhaven.

• Water quality within these dams is controlled and

monitored and exclude all recreational use.

• Dams generally bounded within their catchment

area.

• Generally utilised for potable water storage, hence

required to meet specific water quality parameters.

Available at:

www.waternsw.com.au/supply/dam-levels/greater-sydneys-dam-levels

http://realtimedata.water.nsw.gov.au/water.stm?ppbm=DAILY_REPOR

TS&dr&3&drkd_url

WaterNSW operate two categories of dam

storages, each with their own development

implications

Storages within Operational Areas:

• Typically all dams in rural areas.

• Are not Declared Catchment Areas.

• Dams whose major function is for the capturing,

storing and releasing water.

• The operational area defined as being a 40 metre

wide buffer zone above the full supply level of the

dam.

• Storages utilised for recreational, environmental,

leisure, agricultural and industrial use.

A number of considerations will impact the viability of

development opportunities

Declared Catchments:

• Water quality being the prime concern may dictate options such as

floating solar.

• Operational water supply conditions may have priority.

Operational Area Catchments:

• Competing interests from recreational, leisure irrigation and

agricultural users.

• Need to maintain run of river flows to meet environmental conditions.

• Need to avoid National Parks dedicated areas.

Comprehensive data on WaterNSW assets are available to assist

in the initial scoping of opportunities

Dam / Reservoir data available on WaterNSW website:

• Operating capacity

• Size of lake (km2)

• Annual environmental flow release

• Average capacity percentage

Questions?

Please email:

karun.dhiman@waternsw.com.au

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