A feasibility study undertaken by Australian firm Snowy Hydro has confirmed that plans for the Snowy 2.0 pumped hydro expansion project is both technically and financially feasible, with the company’s independent Board of Directors approving further work to be undertaken for the project to progress to a final investment decision in 2018.
The feasibility study released just before Christmas provides a base case design and a strong investment case that exceeds Snowy Hydro’s stringent investment hurdles, with significant input from leading experts in economics, engineering and geology.
Snowy Hydro’s CEO, Paul Broad, said that progressing Snowy 2.0 was a strategic business decision and the projected return on investment would enable the company to fund the project.
“Snowy Hydro already plays a critical role in keeping the lights on but Snowy 2.0 would supercharge our existing capabilities by adding an additional 2,000 megawatts of dispatchable generation and 350,000 megawatt hours of large-scale storage.
“Snowy 2.0 will underpin the security and reliability of the National Electricity Market (NEM) as we transition to a low emissions future, at least cost to consumers.
“As coal-fired generation retires and renewables continue to grow, Snowy 2.0’s scale and central location will provide secure and reliable energy generation and the necessary large-scale storage to prevent blackouts and lower future energy prices.
“Snowy 2.0 is a strategic long-term investment in the NEM that will firm up future wind and solar generation. Intermittent renewables underpinned by Snowy 2.0 is a combination that could replace baseload generation when coal-fired power stations retire,” Broad said.
The feasibility study outlines:
- A strong investment case for the project and funding strategies.
- A base case technical design, to be further refined as the project moves to final investment decision.
- The independent estimation of costs between $3.8 - $4.5 billion, which takes into account the need for extensive reinforcement of the project’s structures due to the challenging geological conditions that were uncovered during the geotechnical drilling program.
- If Snowy 2.0 is not built, the NEM would need a combination of batteries and gas peaking stations to meet future energy needs. This would cost at least twice as much as Snowy 2.0.
- A project schedule that will see the first power generated from Snowy 2.0 in late 2024, in time to meet market needs.
“Completing this study is a significant and exciting milestone for us but it’s only just the beginning. The sheer size of Snowy 2.0 makes it a complex and significant project that will put the Snowy Mountains back in the global spotlight,” Broad said.
Between now and final investment decision, Snowy Hydro will undertake further work including additional geotechnical drilling, issuing project tenders, finalising funding for the project and working through well established and rigorous environmental and planning approval processes.
The project will also boost economic activity across the Snowy Mountains from employment opportunities across the supply chain and in supporting services.
The feasibility study, which was conducted by SMEC Australia and the Australian Renewable Energy Agency, can be viewed here.