Snowy Hydro secures $3.5bn for expansion, remains ‘on track, on budget’
Snowy Hydro has secured $3.5bn in debt to finance its 2.0 expansion scheme.
Snowy Hydro has secured $3.5bn in debt from Australian and international banks to finance its 2.0 expansion scheme with the renewables operator on track to start bringing the project online by late 2024 to early 2025.
The Australian government-owned hydropower producer nearly doubled its original $2bn funding target after strong interest from financiers including Australia’s big four banks for the expansion which will boost its 4100-megawatt capacity in the Snowy Mountains by 50 per cent.
Debt was secured from 12 banks in February on seven and 10 year terms — before COVID-19 roiled markets — with a deal struck reflecting low global interest rates and Snowy’s A- credit rating. “It was oversubscribed by two and this doesn’t have any government guarantee attached to it,” Snowy Hydro chief executive Paul Broad told The Australian. “This is money we’ve raised on our balance sheet based on the economics of the project.”
Energy Minister Angus Taylor and Finance Minister Mathias Cormann signed off on the debt package on behalf of the federal government as Snowy’s sole shareholder.
Mr Broad said the banks’ commitment showed the development stacks up under any scenario.
“They’ve crawled all over it. The data room was forensically pulled apart … and they all signed up,” Mr Broad said. “It’s all sitting on Snowy’s balance sheet and we’re very comfortable with it.”
The original feasibility study for Snowy estimated a budget ranging between $3.8bn and $4.5bn in real dollars which increased to $5.1bn including fixed cost escalation over the construction period.
That jump sparked speculation costs could rise further given technical challenges. The Snowy chief said the 2.0 project remained on time and budget despite last summer’s bushfire disruption and coronavirus volatility.
Mr Broad said he was now focused on repairing some bushfire damage to its facilities and ensuring the power company was providing electricity supplies to customers during a heightened time of volatility.
“We got knocked around really badly in the fires so we’re having to rebuild a large part of our infrastructure up in the mountains and that’s all being done with local people on the Tumut side to get the area going again.”
Snowy also won approval on Sunday from the NSW government to construct a new production unit in Cooma’s Polo Flat airstrip.