Snowy Hydro Malcolm Turnbull

Amidst all the noise over the largely-ridiculed National Energy Guarantee (NEG), cuts to Australia’s marine parks, and a questionable grant for the resources-backed Great Barrier Reef Foundation, Prime Minister Malcolm Turnbull can count the Snowy Hydro 2.0 expansion as possibly this government’s singular achievement in environmental policy.

Announced in March last year, the plan to add 2GW of pump storage to the 4.1GW Snowy Mountains Scheme was, relatively speaking, embraced by politics left and right. Snowy 2.0 has been seen as something of a pet project for the PM, who bought the Victorian and NSW government shares in March and has a long-held admiration for hydropower.

Part of why Turnbull has been able to market Snowy Hydro 2.0 so successfully is because the project demonstrates a genuine contribution to Australia’s electricity grid without outwardly threatening the right’s love affair with coal-powered generation. Even though the expansion also includes a tender for 800MW renewable generation, that’s dwarfed by an extra 2000MW/350,0000MW hours of pumped hydro. And while storage has become synonymous with a renewable future, the process works regardless of sourcing.

“We know that NSW has a very low proportion of renewable energy at the moment,” Climate Council researcher Petra Stock tells Crikey, with 2016 figures putting renewables at 20%. “So if Snowy Hydro 2.0 is accompanied by a dramatic increase in investment in renewable energy, then it could potentially be good for reducing emissions, but, if nothing much changes in NSW and there isn’t that dramatic increase, then the project could actually be worse.”

There’s also the fact that all storage loses some power in the process: Snowy Hydro sits at 75%, so for every 100MW hours pumped up hill it will deliver 75MW hours of energy. In the words of Utopia’s Rob Sitch, the grid as it stands means that “pumped hydro is like trying to charge a Tesla with a diesel generator”.

But Snowy Hydro’s CEO Paul Broad is adamant that the project’s large-scale storage and dispatchable generation will reduce emissions by “firming” intermittent solar and wind generation across the the National Electricity Market (NEM) and help financially underpin new renewable projects.

“The key point here is that Snowy 2.0 will use the peaks and troughs in the market to ‘time shift’ energy, pumping at times of low demand, using surplus energy, and generating at times of high demand when supply is tight,” Broad tells Crikey. “By the mid-2020s when Snowy 2.0 operational, it is expected that most of the surplus energy will come from intermittent renewable sources.”

Still, while Snowy will be able to contract when and where it purchases energy when it launches in 2024, fossil fuels could still hold a sizeable chunk of the NEM. Even the Australian Energy Market Operator’s more ambitious forecast has renewables at just under 60% by 2030 (although, in notable news, 100% in South Australia by 2025). This is all before you even consider the NEG’s (widely-slammed) prediction for 36% on the NEM by 2030.

Further, a report from Marsden Jacob found that Snowy 2.0 would actually “improve the economics of coal-fired generation” by establishing “firming” capacity across the NEM. Basically, if renewables can be switched on and off but coal plants can’t, Snowy will be there to take whatever coal power would get displaced.

In fairness, the company has said it has no interest in underpinning coal, and Broad argues that if Snowy 2.0 was not built the likely alternative — “batteries paired with gas peaking plants” — would run at twice the cost and even higher emissions. He points to an apparent 60GWh deficit in South Australia’s wind generation from 2015-16 as an example.

“Assuming a 100MW battery was fully charged at 0.129GWh, it would be only be able to cover 0.2%, or a few hours, of this two-week energy deficit. Snowy 2.0, however, could generate energy to fill the gaps throughout the two-week period without needing to recharge.”

On that point, critics have compared the project to a war on batteries, and pointed to comments from Broad describing demand-management as “enforced blackouts” as a sign the project hinders a more sophisticated maturation of the grid.

Pumped hydro and batteries are obviously not exclusive, and even complementary in terms of long-term/short-term advantages. But, again, Australia already has a huge amount of storage projects being built; we could hit 50% renewables by 2030 without any more.

In a roundabout way, this all puts the pressure back on Turnbull, who is now both the chief policy maker, the owner of the fourth biggest “gen-tailer” (generator/retailer) in the country, and has also had to defend the ballooning costs of the roughly $6.5 billion project.

It sounds glib, but to justify that, Australia will need to be at a point in 2024 where “surplus energy” translates to “surplus renewable energy”.

Will Snowy Hydro be a victory or a failure for Turnbull’s legacy? Write to [email protected] and let us know what you think.

Peter Fray

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Peter Fray
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