Despite costing up to $4.5bn, the feasibility study for ‘Australia’s biggest battery’ finds it would still be economically viable

This article is more than 2 years old

This article is more than 2 years old

Australians would pay more for electricity and have more volatile supply if the Snowy 2.0 pumped hydropower project is not built, Josh Frydenberg has said.

The energy and environment minister has strongly argued for the necessity of the scheme in an opinion piece for the Australian Financial Review, despite the feasibility study revealing that its estimated cost had blown out by more than $2bn to between $3.8bn and $4.5bn.

The Snowy 2.0 pumped hydro scheme would add 2,000 megawatts of capacity to the existing hydro plants and 350,000MW hours of storage.

Frydenberg said that the scheme was “a giant battery that makes renewables reliable”, filling what he called a “gaping hole in the National Electricity Market” – the lack of storage.

“With the capacity to store enough energy to run for seven consecutive days at its maximum output, Snowy 2.0 will be Australia’s biggest battery,” he said.



Frydenberg said this was the equivalent of 2,700 of South Australia’s big batteries or $180bn of Tesla power walls.

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Frydenberg warned that without Snowy 2.0 the east coast would have “a weaker and more expensive system and we would have failed to future-proof the grid for the inevitable arrival of more intermittent renewables”.

“Instead of falling electricity prices we will see upward pressure on price as volatility continues, there is less competition and other more costly gas peakers and batteries are pursued to stabilise the system.”

Frydenberg said the lack of storage and dispatchable power was “playing out painfully today in Victoria and South Australia”. He cited the use of “expensive, polluting diesel generators using up to 80,000 litres of fuel an hour [which] have been called in just to keep the lights on this summer”.

The project’s feasibility study, released in December, found that despite costing up to $4.5bn it would still be economically viable.

Frydenberg quoted Liberal party founder Robert Menzies to argue that nation-building infrastructure would not come “on the cheap” and noted that Snowy Hydro has said it can fund the project off its own balance sheet.

He acknowledged the cost was “more than first thought, with geological tests indicating there are five different rock types and three fault lines that will need to be negotiated”.

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Addressing the fact that the estimated $2bn cost of transmission to connect Snowy 2.0 to the grid is not included, Frydenberg said poles and wires “are typically regulated assets that are built by the operator”.



“The government has made clear we are prepared to sit down with the relevant parties and work out the best way forward.”

If construction gets underway shortly the Snowy 2.0 scheme could begin operating from 2024.

After the release of the feasibility study, Labor’s climate change spokesman, Mark Butler, said the project “only makes sense if it is put alongside an ambitious renewable energy program like Labor’s 50% renewable energy target”.

Butler accused the government of an inconsistent energy policy, by supporting Snowy 2.0 on the one hand and seeking “to strangle renewable energy investment on the other”.

He said that Bloomberg New Energy Finance analysis suggested the government’s National Energy Guarantee will lead to a cut of 95% in large-scale renewable energy investment.

Butler, who will meet with Snowy Hydro to discuss the feasibility study later in January, also questioned why modelling for the study had not been released.

On Tuesday, the Snowy Hydro chief executive, Paul Broad, defended the viability of the project and suggested that further modelling to support it could soon be released.