Canceled Australian pumped-hydro site could see energy bills rocket

The decision by the recently-elected Conservative government of the Australian state of Queensland to bin a 5 GW/120 GWh PHES project could drive up electricity prices by more than 60% in 2035 and at least 40% per year through 2040.
UK-based analyst Cornwall Insight has stated forecasts for Queensland electricity prices during those periods have escalated in the absence of any plan by policymakers to provide alternative energy storage capacity.
The 2035 date marks when the first, 2.5 GW stage of the two-phase Pioneer-Burdekin Pumped Hydro Storage Project was set to have been operational.
Thomas Fitzsimons, senior modeler at Cornwall Insight said, “The Queensland government’s decision to cancel the Pioneer-Burdekin project is a consequence of the budgetary and delivery problems many of these large, pumped-hydro projects continue to face across the NEM [Australia’s National Electricity Market]. That said, with renewable energy capacity rapidly expanding, the need for long-duration storage like pumped hydro will only increase. Without alternatives to the 120 GWh of [energy] storage the project promised, we face a future of elevated power prices which could impact households and businesses alike.”
The Pioneer-Burdekin project was the centerpiece of the previous, Labor administration’s energy policy but the Liberal National Party (LNP) cabinet, which ousted Labor in a state election in late October 2024, decided to halt the project in November 2024 and has not made any announcements about alternative arrangements.
Consultation
A statement issued by Jarrod Bleijie – deputy premier of Queensland, minister for state development, infrastructure and planning and minister for industrial relations – in November 2024, criticized the project as not financially viable and said, of residents near the site, around 70 km west of the city of Mackay, “The community was never consulted.”
Reporting on Labor’s plans for the PHES, in June 2023, pv magazine Australia said the AUD 12 billion ($7.48 billion) project would create 3,000 construction jobs and, according to former Queensland energy minister Mick de Brenni, “hundreds of supply chain opportunities.”
Bleijie, however, described the PHES as “Labor’s AUD 36 billion hydro hoax” and said it would have cost each Queensland home AUD 15,653 to construct.
Citing a report into the project published by state-owned body Queensland Hydro, Bleijie said, “The report revealed the project could not be built on time to meet Queensland’s emissions targets and the incoming LNP government should consider smaller pumped hydro projects.”
Cornwall Insight’s Fitzsimons said, “The market now has a crucial role to play in addressing this [energy] storage shortfall and will need to deliver large-scale storage systems in order to bridge the gap left by this project.”
Referring to the consultant’s raised energy price forecasts, he added, “We would expect such a clear pricing signal to drive fresh interest in [energy] storage development in Queensland and indeed we are already seeing alternatives beginning to take shape. Going forward, the development of cost-effective storage solutions will be crucial to support Queensland’s 2035 clean energy target and provide reliable, affordable power for all Queenslanders.”
Queensland Hydro’s Pioneer-Burdekin study suggested better value could be obtained from either a 2.5 GW or 3.75 GW PHES and stated, “In the absence of the system level analysis demonstrating Queensland’s need for a 5,000 MW PHES scheme, reference project option 1 [Pioneer-Burdekin] is not considered viable and should be modified to a smaller capacity.”
The state entity also suggested private, third-party PHES owner-operators could be brought in as minority shareholders in any project of a smaller scale.