Snowy Hydro announced the signing of eight wind and solar contracts today to provide cheaper energy to 500,000 households.
The eight projects, totalling 888 megawatts (MW), are located across New South Wales and Victoria and are expected to generate about 2.8 terawatt hours of energy annually.
The new renewable energy generation, ‘firmed’ by existing Snowy Hydro assets, is a game-changer and will push down future energy prices. This will bring on significant new energy supply and therefore much-needed competition to the market, and will enable Snowy Hydro to pass on lower wholesale prices to our customers.
The renewable energy we have contracted will enable Snowy Hydro to offer very competitive, firm wholesale prices (ie. the cost of the raw renewable energy plus the cost of ‘firming’) – for below $70/MWh for a flat load, for up to 15 years.
Snowy Hydro is a key provider of fast-start, “capacity”-type products, and we keep the lights on at times of high demand. However, we are ‘energy short’ (meaning that we do not generate enough energy from own power stations to cover all of our customers) so we have to purchase energy from the wholesale market. We are one of the largest energy buyers in the NEM and, just like households, we are exposed to high wholesale prices.
Over the last 12 months, there have been rapid changes in the NEM and competitive pricing across all generation technologies has seen the cost of renewables fall.
Snowy Hydro was overwhelmed with the level of interest in our Renewable Energy Procurement Program, which saw more than 17,600MW of projects submitted through the procurement process. All eight winning projects are expected to come online within the next two years.
Snowy Hydro’s existing hydro, gas and diesel assets give us the ability to ‘firm’ up vast amounts of intermittent renewable generation today to ensure energy is available when needed.
In simple terms, ‘firming’ works by transforming intermittent energy into reliable energy so it’s available on-demand when a customer needs it. While the energy output of individual projects varies, Snowy Hydro’s power stations can work in combination with wind and solar, creating ‘firm’ reliable energy.
Snowy Hydro owns Red Energy and Lumo Energy, which together have more than one million customers.