The abject saga of one of Australia’s most controversial gas fired power station projects

As Snowy Hydro’s $2-plus billion Kurri Kurri Gas/Diesel Power Station finally reaches its testing phase and starts to generate intermittent power, it is sobering to look back over its history, 

As a change from the normal conversational format, this article provides a chronological record of the word-by-word statements made by the key players over the past five years of this saga.

The chronology (attached due to its length) starkly exposes the hyperbole, the conflicting ‘rationales’ of Coalition and Labor governments, and the underestimated costs and completion dates (and multiple revisions).

It also chronicles the exaggerated claims, the hydrogen folly and its unreleased Business Case, and the fundamental flaw of locating a power station where there is not enough gas to provide dispatchable energy 24/7.

First a potted summary, then read the attached for more information:

Kurri Kurri Power Station was initiated to replace Liddell (partially)

The saga began in September 2020 when the Morrison Government set a target for the electricity sector to build 1000 megawatts (MW) of new dispatchable energy before the Liddell coal-fired power station was to close in April 2023.

When there was no response, the government authorised Snowy Hydro to build a 660 MW gas/diesel power station at Kurri Kurri in NSW (KKPS), at an estimated cost of $600 million (to be paid by the government), and be completed by December 2023 (i.e. in 19 months).

The full project cost has blown out to more than $2bn

The cost of the main plant subsequently increased to $765m, then $950m and then to $1.3bn, and is likely to rise again after further problems and delays. This is despite an assurance in KKPS’s Business Case that a 20% increase in the $600m capital cost was ‘improbable’. 

Adding in other project costs, particularly financing and gas infrastructure (which has increased from $100m to $264m, and now to $450m), brings the total to well over $2bn. 

Nonetheless, when the estimated cost climbed to $1.3bn, Snowy Hydro claimed that the economic benefits had increased even more, to $914m (from $531m at FID when the cost was $600m).

Completion delayed to end-2025, 2.5 years after Liddell’s closure

The completion date has been delayed six times from the initial December 2023 target. Testing commenced last December, first power was generated on 27 July 2025, and full commercial operation is expected by the end of this year.

KKPS is two years late, having taken 43 months rather than 19 months to complete.

Completion will be more than two and a half years after Liddell’s closure, the supposed reason for the station “to keep energy prices low, keep the lights on and help reduce emissions”.

Not dispatchable 24/7, nor fast-start

The core attribute of gas-fuelled power stations is to be capable of providing 24/7 energy, and quickly.

However, due to its location at the end of the Sydney-Newcastle Trunkline, a 21 km lateral pipeline and a massive on-site storage, consisting of 24 kilometres of looped one-metre diameter pipe, is being installed. The 70 terajoules of stored gas can fuel the station for 10 hours at full output. (Initially a 6.5 hour storage was proposed).

When the storage is emptied it will take more than a day to refill, assuming gas is available to purchase.

Snowy Hydro made clear in its EIS documents that batteries outcompete gas generators for short periods, which is really all that KKPS is capable of. Also, KKPS’s claimed ‘fast start’ capability takes half an hour to reach capacity (just a tad slower than the few milliseconds for batteries).

Diesel will be a backup but is expensive and highly polluting.

Labor’s hydrogen folly

When the Morrison Government approved the project the then Labor Opposition criticised the decision for being driven by politics and the climate wars, adding “gas projects that stack up will be funded by the private sector, not taxpayers”.

But nine months later Anthony Albanese pledged, if elected, to provide an extra $700m to convert KKPS to run on 30% green hydrogen initially, increasing to 100% by 2030 (without any apparent research and despite Snowy Hydro previously stating it did not consider hydrogen viable or available).

The government called Labor’s hydrogen plan “economically incoherent”, aimed at shoring up support in the Hunter for the forthcoming election.

Subsequent to Labor’s election Snowy Hydro changed its stance, reporting that it was “working hard to achieve hydrogen readiness” and preparing a FID business case for the government’s 2023-24 budget. Three years later and the business case has not yet surfaced. Though Snowy Hydro reported that the turbines are ‘hydrogen-ready’ for 15%, extendable up to 30% at a cost of $75m, and theoretically up to 100%. 

But KKPS will never run on hydrogen. The on-site storage has not been built to store hydrogen, as Snowy Hydro deemed it uneconomic, and there is no supply of hydrogen for the foreseeable future anyway. Recently Minister Bowen confirmed that green hydrogen may only play a “niche” role in power generation because renewables backed by batteries were “cheaper and better”.

A tragic tale of Coalition and Labor Governments driven more by politics than sound technical and economic reasoning, supporting another ill-conceived Snowy Hydro project without undertaking any independent due diligence.

Australian taxpayers have funded a $2-plus billion gas/diesel power station, unable to provide 24/7 dispatchable energy, that will be outcompeted by batteries, will be emitting greenhouse gases and pollutants potentially beyond 2050, will never run on hydrogen, and will never pay for itself.