Snowy seeks to ramp up the grid

The Snowy Hydro is calling on the Victorian government to help it prevent blackouts.

The Snowy Hydro Tumut 3 Power Station, in NSW. Picture: Kym Smith

Snowy Hydro has lobbed a proposal to Victorian Premier Daniel Andrews to urgently address the state’s fragile power grid, requesting his backing for a major new powerline that can deliver huge slabs of electricity directly to Melbourne from the Snowy scheme.

The government-owned player has been holding talks with Victorian utility AusNet to construct a new transmission line potentially by 2022 with access to an additional 1500MW of Snowy’s baseload supply as the state shifts focus to renewable energy supply from its ageing coal plants.

Snowy chief executive Paul Broad sent a letter last week to Mr Andrews, Treasurer Tim Pallas and Energy Minister Lily D’Ambrosio seeking their support for the infrastructure investment.

With the state suffering power cuts in January during an extreme heatwave and the nation’s power grid operator warning of new market risks from the retirement of coal-fired power plants, the Snowy chief said it was time to act.

“It was really frustrating to watch blackouts in Victoria last summer,” Mr Broad said.

“We have 1500MW of existing Snowy today we could have got into Victoria in the summer which would have kept our lights on. But we couldn’t get it in there due to transmission constraints.”

Snowy’s plan underlines growing concern about Australia’s transition from an ageing coal-dominated electricity market to a grid increasingly fed by cheap but intermittent renewables.

Energy Minister Angus Taylor will today launch a new reliability obligation to ensure retailers have sufficient firming capacity to back up renewables supply.

“The firmer the contracted generation source is, the greater its contribution would be to meeting the reliability obligation,” Mr Taylor said. “This will ensure investment occurs in the right technologies to be available at the right time to meet the market’s needs.”

On the transmission front, the NSW government has already proposed a new strategy to boost the state’s interconnections with Victoria while the Australian Energy Market Operator has outlined longer-term plans to boost transmission as part of its 20-year integrated system plan.

However, Mr Broad said more investment was needed sooner to ensure consumers had sufficient power before the next crisis hit.

“They’ve got issues out in the Latrobe Valley now where some coal plants are having troubles,” Mr Broad said, referring to an outage at AGL’s Loy Yang A and maintenance issues at other facilities. “You can’t time these transmission upgrades based on the retirement dates of coal plants.”

Snowy would pay an annual fee to AusNet to help provide backing to fund the transmission line and says other power producers could also use the line should it proceed.

AEMO last week initiated a study that models how the exit of coal plants in the state’s Latrobe Valley could affect the national electricity market following the tight supply situation that emerged after the closure of the Hazelwood plant at short ­notice in 2017.

With EnergyAustralia’s Yallourn coal plant, which generates 12 per cent of the state’s electricity, due to start shutting units from 2029, AEMO said it was working to ensure sufficient supplies and investment signals were in place for replacement generation.

The role of cheap renewables and storage in replacing legacy baseload coal power is a trend already well under way as part of a huge transition shaking up the national electricity market.