Last May (2009), the small town of Millstreet in County Cork was host to an unusual and yet historic event in recent Irish energy history. It was the first public meeting for a Pumped Hydro Energy Storage (PHES) development since the early seventies. There has been a renewed commercial interest in PHES in Ireland in the last number of years. This is mainly driven by renewable energy targets for wind generation and speculation as to whether large amounts of wind energy can be integrated easily into the grid. Turlough Hill, built in 1974 is Ireland’s only PHES station. Plans for a second PHES facility were abandoned by NIE at the Camlough site in the mid 70’s. Currently 2 facilities (Knocknagreenan -70MW and Kippagh Lough-70MW) are in the Gate 3 grid connection process with further applications for 275MW currently outside of Gate 3. A number of other projects are in feasibility assessment stages. Schemes in the public domain are Organic Power’s application for a 45MW PHES site in Derryduff, Co. Cork and preplanning is being submitted for a 480MW sea water PHES site at Glinsk, Co. Mayo. In May 2009, Spirit of Ireland launched an ambitious campaign for energy independent for Ireland within 5 years using large scale coastal PHES coupled with wind energy.

Last November an SEAI organised seminar on electricity storage in the RDS was completely booked out pointing to the large amount of interest in this topic within the Irish energy community. In this context it is worthwhile and interesting to review the work and quality research being done within Irish Universities on this subject. Over the past 5 years a large body of work has been undertaken by UCC, UCD, Trinity and UL in this area. Eirgird have also undertaken high level studies. The following briefly summaries published findings for these important research activities.

The bulk of Irish research in this area from published papers suggests that we do not need PHES until very high penetrations of wind are achieved. For example A. Tuohy et al- examined the unit commitment and dispatch of the Irish power system in 2020 using the WILMAR model. Taking into account the capital cost of storage it was shown that storage in not viable from a system perspective until extremely high levels of wind power are seen on the system. An interesting point on the operation of the system from this analysis noted that the inclusion of storage in the Irish system caused a decreased in CO2 emissions in the Irish system but an increase in CO2 emissions in GB and a net increase across both systems. N.Troy et al looked in detail at the effect that storage and interconnection would have on the AIGS system. It was found that until very high penetrations of wind are reached storage will actually displace the need for base-load units to be online providing reserve to the system. This results in increased cycling of base-load units compared to the system without storage. Similarly, for a system that is a net importer, interconnection will actually displace generation from domestic units, also resulting in increased cycling of base-load units compared to a system without interconnection. Not until very large penetrations of wind does a crossover point exists, where larger and more frequent fluctuations in the wind power output, can be dealt with more effectively on a system with interconnection and storage and thus the system with storage and interconnection becomes the most favorable to the operation of base-load units. “The Viability of Balancing Wind Generation with Storage ” investigated the impact of balancing wind generation with storage for different levels of installed wind and storage under different operational strategies. The analysis showed that as wind capacity increased within the specific system with storage the use of base load decreased substantially while the use of mid-merit and peakers increased. Also the use of mid-merit plants increased with increased storage. In University Limerick research has been undertaken in full energy modeling and investigating the technical potential of PHES to increase fluctuating renewable energy penetrations .

So all this research seems to suggest the following conclusion: We do not need PHES in the Irish power system until we achieve very high wind energy penetrations (approx 40%), so why all the interest…

It is important to bear in mind that these studies look at PHES from a systems operation point of view and do not directly analyze the market operation of PHES. However it’s argued that the models don’t capture the true value of storage and PHES is undervalued in the current market. PHES has many apparent benefits that compliment a power system with high installed wind energy capacity such as fast ramp rates, high reliability and availability, its ability to provide reserve, however all these benefits come at a cost and one of the obvious key issues with PHES is capital cost and uncertainty around CAPEX estimates. My own research shows that during the next 8 years over 7 GW of PHES capacity will be added to the European network and capital costs for these new builds between €470/kW and €2170/kW indicating that costs are highly site and project specific . It also showed that different countries are building PHES for many different and varied reasons. For example reduce volatility of existing hydro resources, arbitrage opportunities, repower existing facilities and aid the integration of wind.

It is clear that if PHES is going to get off the ground from a commercial point of view capital costs must be reasonable. Coastal PHES is cited as solution to this problem as it negates the need for a lower reservoir and thus the capital costs are expected to be lower. While there is still some uncertainty around actual capital costs, the theory and principle are sound. The Spirit of Ireland project has got a lot of attention on the national air waves recently but this doesn’t mean that these projects will get built. There is a legitimate question mark over the expected performance of seawater plant as only 1 plant is in operation today. Equally the lack of detailed costings for the plan and its expected revenue streams make it difficult to objectively judge the scheme. Will investors put their confidence in such technology, I guess time will tell.

Looking forward, many other import factors may effect the market operation of storage in the future Irish market and these factors are not easily determined, for example how will electrical vehicles and Interconnection, both which suppress prices spreads, effect potential profitability of PHES within a future SEM market? The majority of PHES existing today were built in an era when large state owned utilities dominated. Their view to risk and investment is completely different to companies operating today in liberalized markets. Can PHES survive in the current market? Is it no coincidence that the country with the most PHES in the world (Japan) is also made up of 10 vertically integrated private companies and in the USA no large PHES plant has been built in the past 20 year despite massive interest in pre-planning permits to the FERC?

So, what do you think? Do we need PHES in Ireland and if so who will pay for it or build it, or is Coastal PHES the solution?