Snowy Hydro pumped at potential of Malcolm Turnbull’s scheme
Malcolm Turnbull’s planned Snowy Mountains-pumped hydro project is standing up economically under the latest studies.
Malcolm Turnbull’s planned Snowy Mountains pumped hydro project would supply the equivalent of more than $180 billion worth of batteries and is standing up economically under the latest studies, Snowy Hydro says.
But to get across the line, the $2bn-$3bn energy storage project would need a power market where coal power is being phased out, increasing the number of wind farms to provide cheap off-peak power to fill big storage dams.
Speaking to The Australian before the start of the Australian Energy Week conference today, Snowy Hydro chief financial officer Gordon Wymer said a feasibility study into the project, proposed by the Prime Minister in March, was on track for completion in December.
“We are getting increasingly excited about it because the more work we do on it, the more likely, we believe, it is to be economic,” Mr Wymer, who will update the conference on the project today, said. “If you are going to decarbonise the electricity market and knock out coal, Snowy 2.0 is by far the cheapest, most efficient way of doing it. If you want to store the same amount of energy by way of batteries it will cost you 60 to 100 times more.”
The project, which involves pumping water uphill during off-peak periods and then releasing it when there are gaps in supply, has the potential to add up to 2000MW of energy to the NEM, Snowy Hydro says.
More than 500 representatives of government and energy users are expected at the conference in Melbourne as controversy and uncertainty surrounds the industry.
This was spurred by South Australian blackouts, the unexpectedly rapid closure of the Hazelwood power station, rising gas prices as Queensland’s LNG exports ramp up and the federal government fight over the Finkel energy blueprint.
Mr Wymer said the Hazelwood closure had provided the biggest shock, especially for a net buyer of power like Snowy Hydro that needs to supply customers of its retail businesses Red Energy and Lumo.
“The announcement of the Hazelwood closure shouldn’t have happened that way (so quickly) and the impact on anybody who buys power has been very negative,” he said.
Mr Wymer said Snowy Hydro would increase its retail power costs in NSW from July. But despite being a net buyer of power from wholesale markets, Snowy Hydro’s price rises would be less than the 14-20 per cent rises recently announced by bigger players AGL Energy, Origin Energy and EnergyAustralia.
Snowy Hydro is owned by the NSW, Victorian and federal governments. Following the Snowy 2.0 announcement, the federal government is investigating buying the states’ shares for a possible $6bn.
AGL chief Andy Vesey, Spark Infrastructure chief Rick Francis and GE Australia chief Geoff Culbert will also be speaking at the conference today. Chief Scientist Alan Finkel will present tomorrow, along with Australian Energy Market Operator chief Audrey Zibelman.
Mr Wymer said Snowy Hydro was “reasonably happy” with the Finkel blueprint. “It seems to be heading in the right direction of not imposing outcomes (and letting the market sort it out) on the NEM because that has led to trouble in the past, particularly in South Australia,” he said, referencing a high degree of wind power spurred by state and federal targets.
And he backed Dr Finkel’s recommendation for power stations to give three years’ notice before closure.
But he said there were concerns about recommendations that could require spreading the electrical inertia across the system or change dispatch times. “This could make batteries more competitive but the entire rest of the industry is going to have to reconfigure their plant (for dispatch time changes), which is going to cost a fortune and that will be passed on to the customer.”