Market operator still not told of Snowy 2.0 delays, but it won’t be missed much

The Australian Energy Market Operator has still not been told by the government-owned Snowy Hydro that its signature Snowy 2.0 pumped hydro project is delayed. But the market operator says that if the multi-billion project is not ready on time, it won’t be missed much.

The situation around Snowy 2.0 is really quite extraordinary. The principal contractor, Clough, revealed in late June that the project is 18 months behind schedule, at least partly because it struggled to find people trained to use the giant boring machines needed to tunnel into the mountain side.

Clough insisted in a presentation to analysts that Snowy had communicated the delays to the market, but it’s actually done nothing of the sort. It certainly hasn’t told the market operator, who – you might think – would like to know.

We now have the bizarre situation where the company’s contractor says the project is delayed, and the company’s owner, through energy minister Chris Bowen, also says the project is delayed. But as recently as July, when AEMO did its latest call for updates, Snowy Hydro insisted the project was running on time.

It is possible this might have had something to do with the dispute between Bowen and Snowy CEO Paul Broad that led to Broad’s sudden resignation last Friday, although Broad chose to focus on disagreements over the Kurri Kurri gas/hydrogen generator in his subsequent radio interviews.

Someone in AEMO, however, is reading the media, and the market operator has prepared a special scenario as part of its 10-year supply outlook known as the Electricity Statement of Opportunities (ESOO) to consider what would be the impact if Snowy 2.0 did turn out to be delayed by 18 months or two years.

Remarkably, it turns out that Snowy 2.0 won’t be missed much.

The first reason for this is that it is quite possible that HumeLink, one of the main transmission projects designed to connect Snowy 2.0’s storage to the rest of the grid, won’t be ready in time.

And, according to AEMO, even if HumeLink is ready, other generators will be able to use that link to deliver their output to the major load centres.

It does beg the question: Do we really need Snowy 2.0? Perhaps, in the long term, its claimed storage of 350GWh will be useful for seasonal fluctuations and what the Germans call “Dunkelflaute”, although there is some question about how much of that storage capacity will actually be available, given restrictions on river flows, etc.

AEMO says that despite the media speculation about the delays (and the quite explicit observations of the company’s owner and major contractor, Snowy Hydro has provided “unchanged advice regarding the intended commissioning schedule of Snowy 2.0 between 2025-26 and 2026-27 since the 2021 ESOO.”

But, just in case, and in light of the media reports, it modelled a potential delay that would put its commissioning back two years to 2027-28 and 2028-29.

According to AEMO: “Without the development of HumeLink, the project is not able to deliver a reliability benefit in the ESOO Central scenario, and likewise does not reduce reliability if it were delayed in this case.”

But then it adds:

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