Batteries solved the easy part Battery energy storage has been one of the NEM's success stories. It responds in milliseconds, deploys in modules, competes hard in arbitrage and frequency markets, and has helped take the edge off peak prices. The economics work best in short-duration, high-cycling roles. Stretch a battery to cover 14 or 16 hours and the maths shifts. More of the asset must sit in reserve rather than earn and there is no commercial 14-hour battery system operating anywhere today. There is a subtler catch too. Battery prices have fallen because cell prices have fallen. But the rest of the system, the power electronics, civil works, grid connection and construction, does not follow the same curve. In Australia, those costs set a floor that cell savings cannot push through. What a coal plant actually leaves behind When a synchronous coal generator shuts down, the grid loses dispatchable energy. It also loses inertia, system strength, fault current and black-start capability, the invisible services that keep voltage and frequency inside safe limits.
Close on day one. AUD 4 billion apart by year 100. Battery cells degrade and must be replaced roughly five times across the life of a single pumped hydro civil structure. Levelised cost of storage: AUD 56/MWh v AUD 71/MWh.
This is not a contest None of this makes pumped hydro the rival of batteries. They do different jobs. Batteries own rapid response and short-duration balancing. Pumped hydro owns long-duration firming, synchronous support and the insurance value that shows up in weeks like that South Australian wind drought. Peer-reviewed modelling in Nature Communications finds long-duration storage is most valuable in wind-heavy grids and that enabling long storage cycles can cut prices during peak demand by more than 70 percent⁸. Delivery risk is real and worth naming plainly. The lessons from Snowy 2.0 and Pioneer-Burdekin are about contracting, ground risk and community engagement, not about the maturity of the technology itself. Snowy 2.0 makes the point: its budget has blown out from an initial AUD 2 billion to well beyond the AUD 12 billion reset, driven by geology and delivery rather than any flaw in pumped hydro as a technology⁹. In pumped hydro, location is the dominant variable.
Pumped hydro replaces both because it spins synchronous machines, so it delivers those stability services the way coal did, while also shifting energy across many hours. Batteries provide fast frequency response and their grid-forming abilities are improving, but AEMO has not yet rated them as suitable for many of the services pumped hydro provides today. On present evidence, only pumped hydro can do all of it at once. The number that matters is not the sticker price Compare the two on day-one capital cost and they look close. On a like-for-like basis, GHD's modelling puts 16- hour pumped hydro at about AUD 283 per kilowatt hour against about AUD 304 for an equivalent battery. The gap opens over time. A pumped hydro scheme's civil works, its reservoirs, tunnels and waterways are built to last 80 to 100 years, with periodic refurbishment of the electro-mechanical gear. A battery has to be repowered roughly every 20 years as its cells degrade. Run that out over a 100-year horizon and the picture is stark. Sustaining capital lands at about AUD 1.6 billion for pumped hydro turbine overhauls versus about AUD 7.8 billion of battery repowering. Total real lifecycle cost comes to roughly AUD 15.3 billion for pumped hydro against AUD 19.3 billion for an equivalent 16-hour battery. Pumped hydro also lands a lower levelised cost of storage, about AUD 56 per megawatt hour today versus AUD 71 for batteries.
16-hour pumped hydro
Repowering cycle, ~every 20 years
16-hour battery equivalent
One spends in the regions. One spends offshore.
Sustaining capital: AUD 1.6bn v AUD 7.8bn
0
100 years
As storage becomes structural to the grid, and as batteries need replacing again and again, cost composition becomes a question of sovereign resilience, not just price.
Years from commissioning
Source: GHD modelling, 2026.
Where the money gets spent There is a strategic dimension the balance sheet does not always capture. Pumped hydro is construction-led. Around 70 percent of its cost is civil works, tunnelling, earthworks and transmission, most of it spent in Australian regional communities. Batteries are the reverse. More than 75 percent of the cost is manufactured equipment, and the International Energy Agency finds China holds close to 85 per cent of global battery cell production capacity, alongside dominant shares of cathode and anode material⁷. As storage becomes structural to the grid and as batteries need replacing again and again, that offshore exposure becomes a question of sovereign resilience, not just price.
70%
Pumped hydro
75%+
Batteries
Cost categories – Civil works – Tunnelling and earthworks
85% China
– Transmission – Manufactured equipment – Power electronics
Share of global battery cell production capacity
Source: International Energy Agency, Batteries and Secure Energy Transitions, 2024.
38 | GHD | Nexus Magazine
Nexus Magazine | GHD | 39
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