The board of Snowy Hydro has approved a “final investment decision” for the Snowy 2.0 pumped hydro scheme, leaving it to its major shareholder – the federal government – to make the final call on the $6.5 billion plus project.
The Snowy board made the announcement in a brief statement issued late on Wednesday. It did not include any new information or details on the costs of the scheme, its economics or engineering challenges. An early feasibility report released earlier this year also excluded details of the economics.
The Snowy 2.0 scheme, which proposes to create 2000MW of “on-demand” generation and 350,000MWh of storage, was championed by former prime minister Malcolm Turnbull, and is likely to find a champion in the current government, given that energy minister Angus Taylor’s grandfather was chief engineer and commissioner of the original Snowy hydro scheme.
“After almost two years of rigorous due diligence on every aspect of the Project, including detailed financial analysis and ongoing geotechnical drilling, the Board is confident Snowy 2.0 is a strong investment for the Company,” the board said in a statement.
“The Board has informed the Shareholder of its decision to proceed with Snowy 2.0 subject to Shareholder approval. Further Project information will be released following Shareholder approval.”
When that occurs is not entirely clear. Energy Minister Angus Taylor, en route to the Poatina hydro facility in Tasmania for an announcement about its tender for new generation, said the government will take “whatever time is required” to do the necessary due diligence and “go through the normal processes to make ensure we make the right decision.”
“I’m not going to pre-empt the process,” the minister said in an emailed statement. “As we’ve always said, the Snowy 2.0 needs to stack up.”
There has been question marks about how and whether the project will stack up, and whether it can capture enough of the assumed “market benefits” to pay back the cost of the scheme.
The Snowy board is anxious to advance the proposal, both because it needs more generation capacity to reduce its exposure to the market, and because it faces competition elsewhere, both from other pumped hydro projects and the emergence of battery storage.
It recently completed a tender for wind and solar projects which it said had delivered in “game changing” prices that would deliver “firm” wind and solar generation at less than the cost of current baseload. But it would not reveal which projects or companies had won the tender, and while most details have since emerged, not all have been clarified.
It has also sought indemnity against the costs of transmission lines needed for the project.
The NSW government earlier this week released its pumped hydro roadmap, which identified 24 short-listed pumped hydro projects that together had capacity of more than 7,000MW – three times the scale of Snowy 2.0.
NSW energy minister Don Harwin said pumped hydro would be critical for the smooth transition to renewables in NSW, which experts say could be even quicker than other states because most of its coal-fired generators are due to retire over the next 15 years.
Harwin says the large-scale pumped hydro projects that will be developed using WaterNSW assets will reshape the NSW energy landscape and help support the State’s $26 billion pipeline of renewable energy projects.
Included in these is the 4GW Walcha project in New England, which is looking at a major pumped hydro scheme that could use, and enhance, the water supply for Tamworth by adding an extra storage pond.
“This is a great use of our dams – we know clean energy projects like this are key to attracting investment in our regional communities and ensuring their growth for generations to come,” minister for regional water Niall Blair said.
“We have received enormous interest from the private sector with 65 commercial opportunities identified, 24 of which WaterNSW has selected for further investigation. The projects range from new traditional hydro projects to battery storage – but predominantly pumped hydro combined with wind, solar or both.”
Hydro Tasmania is also pushing its “battery of the nation” project, and on Thursday released new modelling that suggests a new link (known as Marinus) across Bass Strait could unlock up to 400MW of “latent” excess dispatchable capacity that could be delivered to the main grid. It would not require new investment in Tasmania, but more could be delivered if pumped hydro capacity was increased.
“This capacity is not currently available to the market due to insufficient means of delivery,” the document says. And it would be cheaper than the current alternative to meet demand peaks, which is peaking cycle gas, which it says is costing at least $150/MWh, and a total of $150 million in generation costs for every terawatt hour.
The Hydro Tasmania report refers only obliquely to the opportunity for new wind generation to be paired with hydro capacity to deliver power to the mainland, but it would require further investment in interconnectors.
“Further interconnection would unlock new sources of energy to provide long-term security such as new interconnection-enabled on-island wind generation or importing energy from the mainland at times of plentiful supply,” it says.