‘New Snowy Hydro will be any new coal-fired power plant’

Snowy Hydro yesterday declared Malcolm Turnbull’s Snowy 2.0 pumped hydro project will ‘out-compete any new coal plant’.

Malcolm Turnball tours the Tumut No 3 power station in March last year. Picture: Andrew Taylor

Snowy Hydro yesterday declared Malcolm Turnbull’s Snowy 2.0 pumped hydro project will “out-compete any new coal plant”, inflaming the nation’s energy wars as pro-coal backbenchers demand changes to competition laws to keep ageing coal-fired generators running.

Energy Minister Josh Frydenberg yesterday left the door open to empowering the competition watchdog to force energy companies to sell coal-fired plants to rivals rather than close them. However, he said he would await recommendations from the Australian Competition & Consumer Commission, which is due to report next month on measures to improve energy affordability.

Days after former prime minister Tony Abbott blasted “anti-coal” energy bureaucrats, the government-owned Snowy Hydro Limited said the $4 billion Snowy 2.0 project would make new coal plants unviable.

“We will out-compete any new coal plant, with no subsidies, no government guarantees, nothing. We will out-compete them on price, and on reliability,” Snowy Hydro chief executive Paul Broad told a Senate estimates hearing yesterday.

In a further blow to the Coalition’s pro-coal faction, the ­Australian Energy Market Operator’s summer report, to be released today, recommends im­proved reserves of “flexible and dispatchable” power be brought online to improve grid reliability. Coal-fired power is not considered flexible as it cannot be turned on and off quickly.

The AEMO report revealed there had been no blackouts caused by insufficient supply across the national energy market last summer, the first summer since Victoria’s 1600 megawatt Hazelwood power plant closed.

However, the report called for discussions on a new reliability standard to ensure sufficient operational reserves that could be brought online quickly. It also called for new “distributed” power resources to be brought into the system, which could include household batteries and other electricity storage options.

The Prime Minister came under pressure in the Coalition partyroom yesterday from pro-coal Monash Forum members angry about the government’s inability to force AGL to sell NSW’s Liddell power station to Alinta Energy, which proposes to extend the coal plant’s life.

Liberal backbencher Craig Kelly, backed by Mr Abbott, called for new laws to make it “crystal clear” that closing down an essential service utility when there were “other options”, such as selling to another player, was anti-competitive behaviour. Mr Abbott said Liddell was an essential service and “we can’t stand by and watch” while it closed down.

Mr Turnbull referred the matter to Mr Frydenberg, who did not rule out changes but said he wanted to first see the ACCC’s report.

Former Nationals leader Barnaby Joyce also addressed the partyroom, saying the government should not allow AGL to “keep jerking us around”.

Snowy Hydro told Senate estimates in February that if a new coal-fired plant were built, it would jeopardise the viability of Snowy 2.0. But yesterday Mr Broad said the company no longer believed this was the case, arguing the energy market had reached a “tipping point”.

Mr Broad said even a massive 3000MW high-efficiency, low-emissions, coal-fired power plant would now be unviable, given the “massive” amounts of renewables coming onto the market, which would be “firmed” by Snowy Hydro 2.0.

He told the committee it would cost Snowy 2.0 $40 per megawatt hour to pump water up into its storage facilities, but it would sell power for $80/MWh into the grid.

However, Mr Kelly questioned Snowy Hydro’s figures, asking how it could have changed its position in just three months. “What has changed since last Senate estimates?” he said

Mr Frydenberg told The Australian AEMO had done a good job of steering the energy system through a difficult summer, the second hottest on record.

But he said the 1141MW bought back by the regulator from big energy users during two high-demand events was evidence of the need to finalise the government’s national energy guarantee.