An open letter to Prime Minister Scott Morrison and the Premier of New South Wales has warned that the already inflated costs of the massive Snowy 2.0 pumped hydro project will blow out to roughly double original estimates, to somewhere in the vicinity of $10 billion.
The letter is the second to be sent to the PM and Gladys Berejiklian by a group of 37 eminent Australian energy, engineering, economic and environmental experts, who in March warned of the many “overstated and false claims” used to prop up the Snowy 2.0 pumped hydro project and called for a comprehensive review.
Since then, the authors say, more revelations have emerged, namely from the recently released projections by the Australian Energy Market Operator, to highlight the folly of the “inefficient, unnecessary and damaging” project.
“It is now even more clear that there are numerous alternatives that are lower cost, more efficient, quicker to construct, and incur less emissions and environmental impacts,” the letter said on Friday.
The letter notes that AEMO’s forecasts demonstrate that Snowy 2.0 will never pay for itself and is not needed until the 2030’s, by which time emerging technologies like battery storage and demand response will have come into their own.
And it also notes an August analysis from the Victoria Energy Policy Centre that finds that even Snowy Hydro’s inflated revenue projection will only cover a quarter of the project’s capital cost.
On cost, the letter says, “the Business Case estimate of $3.8 – $4.5 billion is understated, also by around 100%. It has been disclosed that the estimate does not include all project costs, and has already been exceeded by a $5.1 billion contract for just a portion of the works.
“Once all costs are added, including the associated transmission lines, we predict the total to be in the vicinity of $10 billion,” it says. “Not only has output been overestimated by 100%, Snowy 2.0 is not urgent, nor critical for the transition to renewable energy, nor ‘renewable’.
On top of this, the signatories note, the cost trajectory for pumped hydro is rapidly heading in the opposite direction to other energy storage technologies, with AEMO recently revising its modelling costs to increase pumped hydro costs by 50% and decrease battery costs by 30-40%, with a further 50% decrease in battery costs forecast for the end of this decade.
All of this emerging information. the letter says, is confirmation “that Snowy 2.0 should never have been approved and, if constructed, will be a $10 billion White Elephant.”
And while $1 billion has reportedly already been spent on the project, “it is well time to cut the losses – there is still $9 billion or more to be saved on behalf of Australian taxpayers and electricity consumers,” the letter says.
“We again urge your Governments to undertake an independent expert review of Snowy 2.0. Recent information confirms that Snowy 2.0 is not critical, not viable, uncompetitive, wasteful, and will devastate vast areas of Kosciuszko National Park. There are far better alternatives.”
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