By Nick Toscano and Mike Foley
Fresh delays facing the Snowy 2.0 pumped hydro project are deepening doubts about the grid’s ability to handle the closures of up to five coal-fired power stations this decade without more fast-start gas plants, transmission lines and big batteries to back up renewable energy.
On Wednesday, the federal government-owned Snowy Hydro said the 2000-megawatt project in the Snowy Mountains in NSW may now not be fully operational until December 2029, while its $5.9 billion budget faces further blowouts.
The hugely complex Snowy 2.0 project has been mired in construction difficulties.Credit: Jamila Toderas
Snowy 2.0, which uses surplus electricity to pump water uphill and release it to spin turbines at times of high demand, is considered an important project in driving the shift to clean energy because of its ability to back up renewables when the wind isn’t blowing and the sun isn’t shining.
However, the multibillion-dollar project is already running behind schedule, and mounting delays have contributed to the Australian Energy Market Operator’s worries about the east-coast electricity grid’s ability to cope with the impending closures of several of Australia’s large coal-fired power stations in coming years.
Snowy chief executive Dennis Barnes attributed the latest delays and cost increases to the effects of COVID-19, supply chain disruptions, and design and geological issues.
“I am committed to being transparent about our progress and how we are proactively managing the inevitable issues and challenges that arise in a complex project like this,” he said.
NSW Premier Chris Minns said he was concerned about the security of the state’s future energy supply following news of further delays to Snowy 2.0. He said the delays posed “an impediment to ensuring we have efficient dispatchable supply”.
“It’s a difficult transition,” he said. “We’ve never pretended anything otherwise.”
On Wednesday, Climate Change and Energy Minister Chris Bowen accused former Morrison government energy minister Angus Taylor of hiding the project’s delays before the May 2022 election.
“When we came to government, my incoming minister’s brief told me that Snowy 2.0 was running at least 12 months late,” Bowen said.
Minister for Climate Change and Energy accused the previous government of hiding the project’s delays before the 2022 election.Credit: Alex Ellinghausen
“We all should have known that, AEMO should have known that, you should have known that, the states and territories should have known that – the only people who knew it was Snowy and Angus Taylor.”
AEMO, which surveys companies on the expected completion date of important energy projects, was told in May 2022 that the project would be completed by the end of 2026. Snowy Hydro stuck with that deadline when it reported again in July.
Taylor rejected Bowen’s claims as a “load of nonsense”.
“Chris Bowen should spend less time attacking the opposition and more time attacking inflation,” he said. “Once again, Labor has shown it’s got an excuse for everything and a plan for nothing.”
A series of construction delays at Snowy 2.0 have added to concerns from the industry and AEMO about the risk of electricity supply gaps widening in the coming years.
Up to five coal-fired power stations, including the Yallourn generator in Victoria’s Latrobe Valley, NSW’s Liddell, Eraring and Vales Point power plants, and Queensland’s Callide B, are expected to shut down this decade, removing 13 per cent of the east-coast grid’s generating capacity.
Supply gaps will begin to emerge from 2025, AEMO warns – first in NSW because of Origin Energy’s possible closure of Eraring, then in Victoria from 2026. On Wednesday, AEMO said the timing of Snowy 2.0 would not bring forward reliability risks because the project was never due to be completed before 2025-26.
AEMO chief Daniel Westerman in February called for greater investment in “firming” infrastructure, such as pumped hydro, gas and long-duration batteries, as well as new transmission lines and clean-energy projects.
“Investment in firming generation ... is critical to complement our growing fleet of weather-dependent renewable generation to meet electricity demand without coal generation,” Westerman said.
EnergyAustralia’s Tallawarra B, a 316-megawatt fast-start gas-fired power plant in the Illawarra, is on track for completion and commercial use by October or November, which the company says will provide critical support for renewable energy.
When Origin Energy announced its intention last year to close Eraring early, it gave a commitment it would continue evaluating market conditions and not withdraw the plant in 2025 unless the grid was equipped to handle its exit.
Opposition energy spokesman Ted O’Brien called on the federal government to urgently enter discussions with Origin to keep Eraring open until replacement “dispatchable” capacity came online.
Snowy Hydro on Wednesday said its management team was working towards “resetting” the Snowy 2.0 project’s delivery timeline and budget with principal contractor Future Generation – a joint venture between Italy’s Webuild, Clough and US-based Lane Construction.
Snowy Hydro said it wanted to place the project on a “realistic and sustainable footing”.
“This project is critically important to the transition of Australia’s electricity grid, and it is crucial that we are working to a safe, efficient and realistically achievable timeframe to enable orderly planning for all our stakeholders,” Barnes said.
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