Snowy 2.0 FAQs

What is the Snowy 2.0 project?

Snowy 2.0 is an expansion of the existing Snowy Scheme adding new pumped hydro capability between Tantangara Reservoir and Talbingo Reservoir. The project would increase generation capacity by up to 2000 megawatts, and at full capacity, about 350 000 megawatt hours of energy storage. Snowy 2.0 will act like a giant battery, storing water which can be used as energy at times of high energy demand. As the economy decarbonises we are seeing more intermittent sources of electricity generation (like wind and solar) added to the energy mix while coal fired generation is retiring. This change in the energy market will make large-scale storage projects like Snowy 2.0 critical.

When it comes to capacity, cost, location and longevity, there is currently no other technology or storage option that comes close to Snowy 2.0. Snowy 2.0 is strategically located to service the two main load centres of Sydney and Melbourne and uses existing water storages so there is no need for new dams.

The feasibility study for Snowy 2.0 is now complete and has been carefully considered by Snowy Hydro’s independent Board of Directors. The Board’s decision is to progress the Project from feasibility stage and undertake further work and Project refinements so a final investment decision (FID) can be made. The FID is expected to be made in late 2018, subject to the approval of our shareholders.

What was the outcome of the feasibility study?

The feasibility study demonstrates the key benefits of Snowy 2.0 which include:

  • System security and reliability - Snowy 2.0’s dispatchable energy generation can respond within minutes to changing market needs.
  • Lower energy prices - wholesale energy costs will be lower with Snowy 2.0 in the market than without.
  • The central location - power from Snowy 2.0 will reach all energy system users, including the major load centres of Sydney and Melbourne directly and South Australia indirectly.
  • Low emissions - Snowy 2.0 enables a low emissions future to be delivered at least cost, by providing energy system stability that supports the accelerated growth of the currently poorly integrated intermittent renewable generation.

The feasibility study also demonstrates that Snowy 2.0:

  • Is technically feasible - that is, it can be physically built and we have a base case design, construction schedule and costing.
  • Is financially feasible - it will generate returns that meet Snowy Hydro’s stringent investment hurdles.
  • Can be funded internally by Snowy Hydro, and we are looking at a range of financing options.
  • Will not have any impact on downstream water users and doesn’t change the water release obligations under Snowy Hydro’s water licence.
  • Will go through well established and robust planning and environmental approval processes.

How much is Snowy 2.0 going to cost?

Snowy Hydro engaged consultants Turner and Townsend to provide a fully integrated cost estimate and Project schedule. Costs were refined with the assistance of tier-one civil, mechanical and electrical companies which were part of the early contractor consultation process.

The capital cost estimate will be further refined as the Project moves to FID but the current estimate is between $3.8-$4.5 billion.

How long will it take to build Snowy 2.0?

Snowy 2.0 is technically feasible and there is a solid base case design. The base case construction schedule is about seven years from final investment decision.

How many jobs will the Snowy 2.0 project create?

It’s estimated that Snowy 2.0 will create up to 5,000 direct and indirect jobs across the region over the construction period. A workforce plan will be developed as the Project progresses to final investment decision and a lead civil works contractor is appointed. The Project workforce will grow from a small base in year one, to an estimated 1,000 – 2,000 at peak times across different locations across the region.

Businesses interested in getting involved with the Snowy 2.0 Project can register their interest by emailing shlprocurement@snowyhydro.com.au

What role does SMEC have on the Snowy 2.0 project?

SMEC was the lead consultant engineer for the feasibility study. They were appointed after a competitive selection process and have worked closely with Snowy Hydro on assessing the technical requirements and options for the Snowy 2.0 project.

What are the environmental impacts of the Snowy 2.0 project?

Snowy Hydro has a long and proud track record of operating in the Kosciuszko National Park. An Environmental Impact Statement will be prepared to support these approvals which will take into full consideration the potential environmental, social and economic impacts of the Snowy 2.0 project and how to manage these.

It should be noted that the majority of the Scheme’s expansion will be underground and not through Kosciuszko National Park, this includes the tunnels and power station located approximately 800m below the surface.

What will happen with the spoil excavated for the Snowy 2.0 project

For almost 70 years we have responsibly operated the Snowy Scheme in Kosciuszko National Park. We see the Park as our ‘backyard’ and are absolutely committed to minimising any potential impacts of Snowy 2.0, as we do and have always done for our existing business (see chapter 17 of our feasibility study for more information).

Management of the spoil is a key environmental consideration for our project. As part of our Environmental Impact Statement (EIS) process, we are investigating a number of spoil disposal options including (one or a combination of) reusing the spoil as road base or in construction materials, and disposal on land or within the Scheme’s vast reservoirs. It’s important to remember that the spoil we’re excavating is natural material and is coming from the ground underneath the Snowy Mountains.

At this stage no decision has been made, to help us determine the best spoil disposal option, we’re commissioning independent scientific studies that will conclusively answer the technical, geological and water aspects of each option. The studies will assess and determine local and downstream impacts during construction and operation, as well as how the spoil would behave over the long term and under different conditions (including extreme flooding, droughts etc).

The Snowy 2.0 project will not change the stringent conditions of our water licence (which is set under NSW law). The project won’t change the amount of water released for downstream water users or environmental flows.

This scientific research will be exhaustive, checked by independent authorities and documented in our EIS which will be published online for community feedback as part of the environment and planning approvals process.

Will Snowy 2.0 use or need more water?

The Snowy Scheme operates under a strict water licence issued by the NSW Government. Snowy 2.0 will not in any way impact on Snowy Hydro’s continued compliance with the water licence.

In particular, there will be no change to its water release obligations from both the Murray and Tumut developments, and no change to environmental release obligations.Therefore, Snowy 2.0 will not have any impact on downstream water users or environmental flows.

Snowy 2.0 will also further drought proof the Snowy Scheme. This is because in a pumped hydro system, water is ‘recycled’ between the two storages so the same water can be used to generate power, more than once. It will also provide Snowy Hydro with more options to manage inflows and water shortages in times of drought.

How does pumped hydro work?

Pumped hydro works like a conventional hydroelectric scheme: in periods of high demand, electricity is generated by releasing water from an upper reservoir and into a lower reservoir. Unlike a conventional hydro scheme, where water is discharged, a pumped hydro scheme “recycles” or pumps water back to the upper reservoir during times of low energy demand.

How is Snowy 2.0 a ‘battery’ - it doesn’t look like one?

The ability to pump and store water would see Snowy 2.0 act exactly like a battery in the sense of absorbing, storing and dispatching energy. Snowy 2.0 will pump water using electricity at times of low demand and store it in our dam. Then, when energy is needed most, our stored water will be used to generate and dispatch electricity just like a battery would.

Pumping water at times of low demand means we are able to generate energy at times when consumers need it most. For example, if the wind is blowing in the middle of the night when consumers are asleep we’ll use the wind energy to pump our water into storage and when they wake up and need electricity we are able to generate energy.

When it comes to batteries or other forms of storage technology nothing can compete with Snowy 2.0 when it comes to scale, value for money or capacity. While Snowy 2.0 would use of cutting edge technology and the latest engineering techniques, pumped-hydro itself is a proven form of energy generation and storage.

Why is pumped hydro needed, can we just use batteries?

Pumped hydro is a mature and proven technology and is used around the world to store energy. Snowy Hydro already operates a pumping storage at Tumut 3, and are experts in operating this type of energy asset.

The need for energy storage in the future is only going to grow. While there are existing energy storage options such as household batteries, nothing comes close to the scale, value for money or capacity of pumped hydro. While batteries and new technologies will play a role in providing energy storage, Snowy 2.0 is the most credible option to provide energy storage for households and businesses across the NEM.

Snowy 2.0 Compared with Batteries

Capacity Snowy 2.0 can store  350,000 MWh - this is as much as 35 million batteries (10kwh)
 Cost It would cost more than $200 billion in domestic batteries to produce the equivalent storage of Snowy 2.0
 Output/Dispatch Snowy 2.0 can run for more than a week, domestic batteries typically only last for a few hours
Longevity Snowy 2.0 will last for generations while a typical domestic battery needs to be replaced in around 10 years.

Do you use more energy to pump than you make when you generate?

Yes, there is a small efficiency loss when water is pumped. However, pumping water gives us the ability to absorb energy when it’s not needed, store the water, and release it to generate energy when it is needed.

For example, the sun shines the brightest during the middle of the day, and this is when solar generation is at its peak. However, during the day many people are at work or school so energy demands are not at their peak. Snowy 2.0 could use this solar energy which is not needed during the day to pump water so that when the sun sets and people get home we can generate energy to meet the spike in demand that we see in the early evening.

While we lose some energy pumping water, there is no other way to have it sitting in storage ready to be used when consumers need it most. You can’t make the wind blow or the sun shine, but with pumped hydro you can generated energy on demand. Snowy 2.0 will be reliable and can be quickly turned on to respond to the changing energy needs within a few minutes.

Do we need more storage than just Snowy 2.0? Will there be a Snowy 3.0, 4.0 etc?

We will need a significant amount of dispatchable energy generation and storage in the future. Snowy 2.0 could act as a model for further pumped hydro expansion projects in the area in between Tantangara and Talbingo reservoirs (you may have heard these options referred to as Snowy 3.0 and Snowy 4.0).

As the need for energy generation grows we may look at further expansions and it could be possible to see future projects that could increase the Scheme’s capacity by up to 8000MW.

Projects considered after the construction of Snowy 2.0 would be very cost-effective as they would utilise access routes and the support infrastructure that would have been built at the time of Snowy 2.0.

What about transmission?

Transmission augmentation is required to get Snowy 2.0’s power into New South Wales and Victoria and indirectly into South Australia. The proposed upgrades to the grid will be part of the shared transmission network that other renewable energy projects will also connect to as they come online.

Snowy Hydro (as a generator) does not own or operate the shared grid, which is the responsibility of the transmission network operators. In addition, because the grid is shared with other energy companies who have open access to connect to it, there is a regulatory framework in place to fund the cost to upgrade the shared transmission network.

Therefore, the cost associated with the transmission network upgrades has not been, and cannot be included, in the Project’s costs. However, what will be funded by the Project is the cost of the lines that are required to connect Snowy 2.0 to the shared network, which are connection assets to be used solely by Snowy Hydro.

Due to the critical role that Snowy 2.0 will play in ensuring the security and reliability of energy supply in the NEM, Snowy Hydro will continue to work with the Government, network operators and the Australian Energy Market Operator (AEMO) to resolve the issue of transmission augmentation prior to FID. This includes ensuring that the necessary upgrades to the transmission lines are included in AEMO’s integrated grid plan that provides the planning umbrella for the future NEM.

Who are Snowy Hydro’s Shareholders and what does the Commonwealth’s interest in owning more of Snowy Hydro mean for the project?

Snowy Hydro has three shareholders. The Commonwealth owns 13 per cent, NSW Government 58 per cent, and Victorian Government 29 per cent. Any changes in ownership are a matter for our shareholders. Snowy Hydro has been a entity incorporated under the Corporations Act 2001 (Cth) since 2002, and will continue to operate as a Corporations Law company governed by an independent Board of Directors.

What happens next?

The Snowy 2.0 feasibility study has been carefully considered by Snowy Hydro’s independent Board of Directors. The Board’s decision is to progress the Project from feasibility stage and undertake further work and Project refinements so a final investment decision can be made.

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 final investment decision is expected to be made in late 2018, subject to the approval of our shareholders.