‘Groundbreaking’ Snowy Hydro 2.0 project gets the go-ahead

Australia will build the second largest pumped hydro project in the world after an $1.4 billion investment into Snowy Hydro 2.0 was announced.

The Tumut 3 power station at the Snowy Hydro Scheme in Talbingo, in the Snowy Mountains. Picture: James Lauritz/AFP/Snowy Hydro Ltd

A massive expansion of the Snowy Hydro scheme has been officially approved in a bid to force energy prices down and make power more reliable.

Early works on the pumped hydro-electricity project will start within a week after Prime Minister Scott Morrison confirmed almost $1.4 billion in equity into making the project a reality.

“This will be one of the largest pumped hydro projects in the world,” he said. “There’s only one in Iceland that’s bigger.”

“This is groundbreaking in every sense and it’s something that I think all Australians can have a great sense of excitement and pride about. This is what vision looks like.”

The total cost of the project is expected to be between $3.8 billion and $4.5 billion according to a feasibility study. Taxpayers will chip in $1.38 billion, with Snowy Hydro to fund the rest through its own internal cashflow and debt financing.

It’s expected the first electricity generated from the scheme will be available by October or November 2024.

However, there is still a question over how a transmission line will be built to deliver electricity generated from the power station to NSW homes. Mr Morrison said the funding and delivery of the project was up to the NSW Government.

Mr Morrison made the announcement today during a visit to Tumut in southern NSW.

He said it would provide the energy supply and reliability that the electricity market needs, helping to cut costs to families and businesses and to cut Australia’s carbon emissions.

Pumped hydro works by using cheap electricity — usually at night — to pump water back up a hill and into the dam, where it is stored until energy demands start to peak during the day.

Snowy Hydro’s board approved the final investment on December 12, and the government is satisfied the project stacks up.

The Tumut 3 power station at the Snowy Hydro Scheme in Talbingo, in the Snowy Mountains. Picture: James Lauritz/AFP/Snowy Hydro Ltd

Energy Minister Angus Taylor says the government is confident it will be getting a good return on its investment and will release economic modelling as the project proceeds.

“We’re very confident of the economic case,” he told ABC Radio National on Tuesday.

When completed, the new project will increase generation capacity by 2000 megawatts and provide 175 hours of energy storage — enough to power 500,000 homes during peak times.

It will create up to 2400 jobs in construction and support up to 5000 direct and indirect jobs across the Snowy Mountains region.

The Snowy 2.0 proposal was one of former prime minister Malcolm Turnbull’s pet projects, before he was dumped by his party for pushing for action on climate change.

He commissioned a feasibility study into the plan in March 2017.

Mr Turnbull says he is pleased to see the project given the green light, describing it as key to an energy future with affordable and reliable power and lower emissions.

“As the cost of wind and especially solar becomes less with improved technology, storage is the key to reliability,” he wrote on Twitter.

“And while batteries are improving rapidly, for large scale storage the best option is Pumped Hydro, like Snowy 2.0.”

Former prime minister Malcolm Turnbull visiting the Tumut 3 power station. Picture: Sahlan Hayes/ AFP/Official Photographer to Prime Minister Malcolm Turnbull

Mr Morrison gave a speech on Monday in which he promised to tackle climate change using the Emissions Reduction Fund set up under former prime minister Tony Abbott.

He committed $200 million a year for 10 years to ensure Australia meets the 2030 target of lowering emissions by 26 to 28 per cent on 2005 levels.

Mr Morrison also announced $56 million to kickstart a second electricity interconnector between Tasmania and Victoria.

The Marinus Link proposal could deliver up to 2500MW of renewable hydro power to Tasmania and Victoria, including 16 gigawatt hours of storage. The prime minister has also flagged a future announcement about an electric vehicles strategy.