Australian Chart of the week | Pumped storage: Silent winners in the energy transition so far?

Last week’s Chart of the week discussed the price-setter role renewable technologies are increasingly playing in the NEM. Following on, this week’s Chart examines the impact these pricing dynamics are having on pumped storage operations across the market.

To run, storage technologies – pumped hydro/ batteries – typically exploit arbitrage opportunity pockets in the market (price spreads). They act as load when prices are low (pumping water or storing energy) and dispatch when prices are favourably higher. Given the seemingly suppressive influence renewable technologies are progressively having on prices across the NEM (especially in the middle of the day), we investigate two key questions:

  • is this new pricing reality reflected in load/generation price spreads for pumped storage?
  • how is this changing the dispatch commitments of pumped storage operations in the NEM?

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