The Fed­eral Govern­ment has inked a $6bn deal to pur­chase NSW and Vic­to­ria’s shares in Snowy Hy­dro, now mak­ing it the sole owner. But it’s very much ‘business as usual’ for the project oper­a­tors as they gear up for the planned 2000MW ex­pan­sion.

The Australian Energy Review - - FRONT PAGE -

This month, the Govern­ment an­nounced it will spend $6 billion to buy out NSW’S and Vic­to­ria's shares in Snowy Hy­dro to be­come the sole owner. On the back of this news and the re­lease of a fea­si­bil­ity study and in­de­pen­dent eco­nomic anal­y­sis for the project, Snowy Hy­dro man­ag­ing di­rec­tor and chief ex­ec­u­tive Paul Broad spoke to El­iz­a­beth Fabri. Can you ex­plain Snowy Hy­dro 2.0 in brief?

The Snowy 2.0 project will su­per­charge the ex­ist­ing Snowy Scheme by adding an ad­di­tional 2000 megawatts (MW) of dis­patch­able gen­er­a­tion and 350 gi­gawatt hours (GWH) of large-scale stor­age.

The project scope in­cludes link­ing the two ex­ist­ing reser­voirs of Tan­tan­gara and Tal­bingo through ap­prox­i­mately 27km of power wa­ter­way and a new un­der­ground power sta­tion. The pumped hy­dro ca­pa­bil­ity means the water utilised for elec­tric­ity gen­er­a­tion can be ‘re­cy­cled’ in a closed sys­tem be­tween the two reser­voirs and used again to gen­er­ate en­ergy sup­ply when it’s needed most.

Q. Why is this such a sig­nif­i­cant project?

Snowy 2.0 is a crit­i­cal project for the NEM and will serve the mar­ket and con­sumers by pro­vid­ing dis­patch­able gen­er­a­tion to ad­dress sup­ply volatil­ity, as well as fast-start ca­pa­bil­ity and large-scale stor­age to ad­dress in­ter­mit­tency is­sues.

We be­lieve that the NEM is at the tip­ping point of re­new­ables be­com­ing the dom­i­nant source of power with coal on its way out.

This tran­si­tion to re­new­ables can­not be achieved in an or­derly fash­ion with­out mas­sive stor­age. Snowy is the sup­plier of stor­age on scale and is strate­gi­cally lo­cated be­tween the two ma­jor load cen­tres of Sydney and Mel­bourne.

In­ter­mit­tent re­new­able gen­er­a­tion, un­der­pinned by dis­patch­able gen­er­a­tion such as hy­dro-power to en­sure re­li­a­bil­ity of the en­ergy sup­ply, is a com­bi­na­tion that could re­place ther­mal base load en­ergy.

The high de­gree of ur­gency with which Snowy Hy­dro is pro­gress­ing the project re­flects the rate of change be­ing ex­pe­ri­enced across the NEM.

Q. You re­cently re­leased your fea­si­bil­ity for the project – how would you sum up the find­ings?

In a nut­shell the fea­si­bil­ity study con­firms the project is tech­ni­cally fea­si­ble, iden­ti­fies a base-case project de­sign, and that the project will be a solid in­vest­ment for Snowy Hy­dro who will fund the cap­i­tal costs.

The in­de­pen­dent ex­pert mar­ket anal­y­sis done as part of the study con­firms that, if Snowy 2.0 was not built, the need for stor­age would be met by open cy­cle gas plants (that re­quire as­so­ci­ated in­fras­truc­ture such as gas pipe­lines and stor­age), sup­ple­mented by bat­ter­ies. This would be at least dou­ble the cost of Snowy 2.0.

Q. The fea­si­bil­ity re­port es­ti­mates a cap­i­tal cost of be­tween $3.8 billion and $4.5 billion for Snowy Hy­dro 2.0. Why is this more ex­pen­sive than the ini­tial $2 billion price tag?

The pur­pose of the fea­si­bil­ity study was to de­ter­mine the costs of the project. The es­ti­mates of be­tween $3.8 billion and $4.5 billion are the first time we’ve had project costs.

Early num­bers that were dis­cussed were based on very rough es­ti­mates from plans that we had from when we last looked at this project in 1991 (that plan was also only half the size of the Snowy 2.0 project).

Fur­ther­more, the geotech­ni­cal drilling pro­gram un­cov­ered some very chal­leng­ing rock types which will re­quire ex­ten­sive re­in­force­ment of the project’s struc­tures.

Im­age: Snowy Hy­dro.

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