Pumped Hydro is the cheapest form of large scale energy storage. It is not new, has been around for more than a century, and is being built around the world. Variable Renewable Energy needs storage. It is the key to a clean energy future.
The decision to proceed with Snowy 2.0 has been based on extensive economic and engineering analysis including the feasibility study published in December 2017. The contracted costs, as Paul Broad has said, are consistent with that study.
Because VRE is zero marginal cost generation there are times in the day when electricity will be in over supply and other times when demand will exceed supply - so Snowy 2.0 will buy the electricity when its cheap, pump water uphill and then generate when demand is high.
The claim that the scheme is in the wrong place is ludicrous. Snowy Hydro sits between the two biggest centres of demand in NSW and Victoria. Of course transmission will have to be upgraded, as it will be right around the country as we move from high emission....
...centralised generation burning coal to decentralised zero emission renewables. As for the environmental impact, one of the biggest attractions of Snowy 2.0 is that almost all of the infrastructure will be underground, and no new dams need to be built.....
...Australia is a big flat, dry continent and we don’t have many locations where there are two existing adjacent reservoirs with big differences in elevation. That’s why I also pushed the “Battery of the Nation” plan with Hydro Tasmania.
As for the feasibility study, it is all on Snowy’s website. The economics are very compelling, hence the IRR of 8%. As to the complaint about the Government building it - Snowy is an iconic national asset which could not be privatised.
So if the Government does not build Snowy 2.0 it would not get built. In summary - the opponents of Snowy 2.0 are, wittingly or not, doing the work of vested interests in the energy sector who profit from the existing volatility and high prices.
And of course there is also the coal lobby who know Snowy 2.0 and other projects like it will combined with renewables provide the affordable, despatchable power required.
The claim that the cost has “blown out” is also nonsense. In March 2017, when I announced we were going to fund a feasibility study Paul Broad’s estimate was of a $2 billion construction cost. But we didn’t proceed on that assumption, we commissioned a full feasibility study..
..which estimated a cost of $3.8-$4.5 billion (in 2017 dollars). That was the basis on which the investment decision was made - a fully cost feasibility study, and the contracted prices are, for the reasons Paul Broad has set out, are consistent with that.