Energy Storage and the Transition

Batteries store energy as chemical potential energy. When charging, electrical energy drives a chemical reaction that stores energy in the battery's electrodes. When discharging, the reverse reaction releases electrical energy. Lithium-ion batteries — the same technology in phones and laptops — now power grid-scale storage facilities.

The Hornsdale Power Reserve in South Australia was the world's largest lithium-ion battery when commissioned in 2017. With 150 MW of power output and 194 MWh of storage capacity, it can power 75,000 homes for one hour. But its real value is not duration — it is speed. The battery can respond to grid frequency changes in milliseconds, far faster than any gas turbine. In its first three years of operation, it saved South Australian consumers $150 million by stabilising prices during supply disruptions.

Battery costs have fallen by 90% since 2010. In 2023, grid-scale lithium-ion batteries cost approximately $400 per kWh of capacity. Australia has over 40 grid-scale battery projects under construction, with a combined capacity of 10,000 MWh. However, lithium-ion batteries are best for short-duration storage (1–4 hours). They are not economical for storing energy across multiple days — a limitation that other technologies address.

Pumped hydro energy storage is the oldest and largest form of grid storage, representing 95% of global storage capacity. The concept is elegantly simple: when electricity is cheap and abundant, use it to pump water uphill. When electricity is expensive and scarce, let the water flow back down through turbines to generate electricity.

Pumped hydro is approximately 70–85% efficient — meaning 15–30% of the energy is lost to friction and turbulence. But what it lacks in efficiency, it makes up for in scale and longevity. A pumped hydro facility can store energy for days or even weeks, and the infrastructure lasts 50–100 years.

Snowy 2.0 is the largest pumped hydro project in the southern hemisphere. When complete, it will store 350,000 MWh of energy — enough to power 3 million homes for a week. The project involves building 27 km of tunnels through the Snowy Mountains, connecting the Talbingo Reservoir (lower) to the Tantangara Reservoir (upper) with a 200-metre vertical drop. The $5.9 billion project has faced significant engineering challenges, including difficult geology and environmental concerns, but remains central to Australia's storage strategy.

Hydrogen is the most abundant element in the universe. When burned or used in a fuel cell, it produces only water as a byproduct — no CO₂, no particulates, no pollution. The challenge is that hydrogen does not exist naturally in pure form on Earth. It must be extracted from water or fossil fuels, which requires energy.

Green hydrogen is produced by splitting water (H₂O) into hydrogen and oxygen using renewable electricity — a process called electrolysis. The energy transformation is: electrical → chemical (stored in hydrogen bonds). When the hydrogen is later burned or used in a fuel cell, the reverse occurs: chemical → electrical. Because the only byproduct is water, green hydrogen is genuinely zero-emission across its entire lifecycle — provided the electricity used for electrolysis comes from renewables.

Australia has enormous potential as a green hydrogen exporter. The Pilbara region in Western Australia receives some of the world's most intense sunshine. Solar farms there could generate cheap electricity to produce hydrogen, which could then be exported to Japan and South Korea — countries with limited renewable resources but strong hydrogen strategies. The Asian Renewable Energy Hub, planned for the Pilbara, aims to produce 1.6 million tonnes of green hydrogen annually by 2030.