There was no money in Budget for the Snowy Hydro extension

SNOWY Hydro 2.0 was announced with much fanfare this year as a solution to Australia’s energy woes but last night’s Budget didn’t put aside any money for it.

SNOWY Hydro 2.0 was announced with much fanfare this year as a solution to Australia’s energy woes but last night’s Budget didn’t put aside any money for it.

Treasurer Scott Morrison made much of the Snowy Mountain Scheme extension in his speech last night saying the Commonwealth was open to acquiring a larger share or outright ownership of Snowy Hydro from the NSW and Victorian state governments, subject to some conditions.

Snowy Hydro is largely owned by NSW, with the federal and Victorian governments minority shareholders.

Mr Morrison said the government had already begun discussions with NSW and invited similar discussions with Victoria.

What was left unclear though, was how the government was going to pay for any potential buyback.

No money has been set aside in the Budget for the scheme, which the government suggested in March could be built in four years.

The extension, dubbed Snowy Hydro 2.0, is expected to cost about $2 billion, although some experts believe it will be closer to $5 billion. It involves constructing three new tunnels and power stations as part of a large-scale, pumped hydro-electric energy storage system.

The government delivered a massive $75 billion on infrastructure spending in the Budget, including $5.3 billion in promised equity for the Western Sydney Airport, $8.4 billion for an inland rail line from Melbourne to Brisbane and $1.6 billion for a road and rail package in Western Australia.

While there is a $10 billion fund set aside for other other projects, when asked if there was money for the buyback of Snowy in the Budget, a spokesman for the Treasurer told news.com.au: “The Treasurer last night announced the Turnbull Government’s intention to acquire a larger share or outright ownership of Snowy Hydro, from the NSW and Victorian State Governments, subject to some sensible conditions”.

Malcolm Turnbull at the Snowy Hydro Scheme to announce the extension in March. Picture: Lukas Coch/AAP

“These include funds received by the States being reinvested in priority infrastructure projects, Snowy Hydro’s water licence obligations being reaffirmed and the project remaining in public hands.

“While in its early stages, discussions have already begun with the NSW Government and the Government has also invited similar discussions with Victoria.”

At the time of the announcement, Prime Minister Malcolm Turnbull said the extension of the Snowy Mountains Scheme would provide more security and greater affordability within Australia’s electricity market.

The extension was expected to increase the amount of electricity the scheme produced by 50 per cent — enough to power 500,000 homes.

But some criticised the plan, saying the extension would not be constructed in time to make a difference to Australia’s looming energy crisis.

The Australian Energy Market Operator has warned of future power supply shortfalls, which could cause blackouts in South Australia, NSW and Victoria unless gas production is boosted and supplied to electricity generators.

The government has so far provided $500,000 in funding for a feasibility study to review geological studies and technology.

The Australian Renewable Energy Agency was expected to deliver its results by the end of the year.

PM Malcolm Turnbull met with former Snowy Hydro workers earlier this year at Parliament House in Canberra. Picture Kym Smith

Originally published as There was no money in Budget for the Snowy Hydro extension