A planned compressed-air energy storage (A-CAES) project for Broken Hill has been identified as the city's best back-up power supply option.

Canadian company Hydrostor plans to repurpose a former Broken Hill mine to store up to 200 megawatts of energy as compressed air which would operate in a similar way to pumped hydro. 

Transgrid, the manager of the electricity network, was tasked with assessing the company's proposal alongside other energy options for the city, including refurbishing the city's existing 50-megawatt diesel turbines.

Its final Project Assessment Conclusions Report (PACR) ranked the Hydrostor proposal on top.

Transgrid's executive general manager of network, Marie Jordan, said it offered more than the generators, which were identified as the second-best choice.  

"It kind of checked all the boxes down the line."

'Brings more to the community' 

The Transgrid report highlighted that Hydrostor's project was expected to deliver $286 million in net benefits over a 27-year assessment period, just under 6 per cent more than the diesel generators.  

Ms Jordan said it would have broader impacts in Broken Hill than the generators.

"It actually brings more into the community than refurbishing the generators."

Third energy pathway with 'tremendous' potential

Hydrostor president Jon Norman said it was past the pilot stage for A-CAES projects in Canada and was in advanced development stages in California.  

He said the Broken Hill project was important. 

"In Australia it really becomes an important proof point at full scale," he said.

"[It] allows for entities like the Australian Electricity Market Operator to start including this type of infrastructure in their modelling.

Mr Norman said the company expected to start construction early to mid next year with an expected completion date of late 2025 to early 2026. 

Costs to pass on to consumers

The Australian Energy Regulator (AER) said Transgrid's PACR was now subject to a 30-day period during which an interested party could lodge a dispute about the report.

The regulator said if no dispute was raised, and Transgrid had complied with National Electricity Rules, then it was expected Transgrid would seek to pass the costs of its preferred option through to customers in advance of its implementation in 2025-26.

The AER said that would require its regulatory approval, with approved costs to be recovered from consumers commencing in 2025-26.