Snowy 2.0 is a major pumped-hydro expansion of the existing Snowy Scheme, and a complex engineering project. These are some of the most common questions.
Why do we need Snowy 2.0?
Snowy 2.0 will underpin Australia’s transition to a renewable energy future at the lowest cost to consumers.
As the transition to renewables accelerates, reliable and stable energy supply cannot be achieved without large-scale energy storage and on-demand generation. Snowy 2.0 will provide large‐scale energy storage and quick‐start electricity generation at critical times of peak demand when energy supply is constrained and at times when intermittent renewable energy output is low.
Snowy 2.0 will have water ready to use for energy generation at times when consumers need it most and will pump water at times where there is an excess of energy production in excess and energy demand is low. Snowy 2.0 will also make efficient use of our precious water resources to generate electricity without impacting downstream water users and environmental flows.
Snowy 2.0 has clear, natural advantages.
It leverages the existing Snowy Scheme which means it does not require new dams, and because it is a closed loop system that ‘recycles’ water, it also makes better use of existing water.
It has the capability to run for more than seven days continuously before it needs to be ‘recharged’. By comparison, small and large-scale batteries have limited storage (typically one to four hours). Snowy 2.0 also has a 100-year design life unlike a battery which has a very much shorter lifespan.
What’s the business case for Snowy 2.0?
In 2017, prior to commencing construction, Snowy Hydro undertook a comprehensive Feasibility Study for the project and prepared a Final Investment Decision report in 2018. Extensive market modelling and economic analysis was performed for the Final Investment Decision The 2018 Final Investment Decision report and the two independent energy market reports undertaken by Marsden Jacob and Associates are available here.
Based on this work, it was agreed the Snowy 2.0 project met Snowy Hydro’s stringent investment criteria. The internal rate of return (IRR) for the project has been modelled at more than 8%, which is strong for this type of project.
What workforce and business opportunities will Snowy 2.0 generate?
The Snowy 2.0 workforce is growing and will reach a peak of approximately 2,000. There will also be thousands of jobs generated indirectly by the project, both regionally and beyond.
Future Generation, a joint venture between Clough and Salini Impregilo, has been appointed as the Snowy 2.0 principal contractor and is responsible for hiring the project workforce and sub-contractors.
The FGJV project website has information for potential Snowy 2.0 suppliers, along with current job vacancies listed on the Careers Centre portal and an option to register your interest in working on the project.
What are the environmental impacts of the Snowy 2.0 project?
For almost 70 years Snowy Hydro has responsibly operated the Snowy Scheme in Kosciuszko National Park (KNP). We are committed to minimising potential impacts from Snowy 2.0, as we do for our existing business.
The total area temporarily impacted by construction is less than 0.25% of KNP and post-construction, the operational footprint of Snowy 2.0 is less than 0.01% of the total size of the park.
The unavoidable project impacts will be offset and construction areas rehabilitated. A program of work to be funded by offsets is being developed in close consultation with key local stakeholders including the National Parks and Wildlife Service. These works are targeted to directly contribute to the ongoing and long-term conservation and recreational use of the park.
Will Snowy 2.0 use or need more water?
The Snowy Scheme operates under a strict water licence issued by the NSW Government. Because Snowy 2.0 simply recycles water between two existing dams, 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 Snowy Hydro’s water release obligations from both the Murray and Tumut developments, and no change to environmental release obligations, meaning Snowy 2.0 will not have any impact on downstream water users or environmental flows.
The role for Snowy 2.0 and batteries
The future NEM will require a huge amount of storage (far more than just Snowy 2.0), which will be provided from a mix of projects and storage options.
Domestic and commercial batteries, small-scale and large-scale hydro projects and demand management will play a role. Batteries provide storage over short time intervals (several minutes up to a few hours), while Snowy 2.0’s size and scale (350 gigawatt hours or 175 hours of operation) provides longer term energy storage that can underpin the stability and reliability of the National Electricity Market (NEM).
An example of when vast amounts of storage would be needed include when there are wind or solar ‘droughts’. In South Australia across the financial years of 2015 and 2016, there was a deficit between average wind production and minimum wind production over a two-week period of 60GWh. If a 100 MW battery was fully charged at 0.129 GWh, it would only be able to cover 0.2% (or a few hours) of this two-week energy deficit. Snowy 2.0, however, could generate energy to fill the gaps throughout the two-week period without needing to recharge.
Do you use more energy to pump than you make when you generate?
Yes, as will any form of energy storage there is an 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 required.
For example, solar generation is at its peak during the middle of the day, when many people are at work or school. Snowy 2.0 could use this solar energy to pump water so that when the sun sets and people get home, we can generate energy to meet the spike in demand that occurs in the early evening.
Are transmission upgrades needed for Snowy 2.0?
The existing transmission network was built many decades ago to transfer the energy from coal-fired plants to the market. Australia’s energy system is rapidly changing. New transmission routes are needed urgently to connect new generation projects, renewable energy zones that are geographically dispersed and energy storage projects right across the NEM.
The Australian Energy Market Operator (AEMO) is responsible for planning the national transmission network for the future. AEMO released an inaugural Integrated System Plan (ISP) in 2018 which provides the transmission system developments to meet the NEM’s critical need for transmission upgrades. AEMO’s 2020 ISP is under development.
AEMO’s ISP supports strategic storage initiatives such as Snowy 2.0, which is required to firm up intermittent renewables in NSW and Victoria, and indirectly, South Australia. The proposed upgrades to the grid are to the shared transmission network that a range of renewable energy generation and storage projects connect to as they come online.
Who owns Snowy Hydro?
Snowy Hydro is an entity incorporated under the Corporations Act (Cth) 2001 in 2002, governed by an independent Board of Directors. The Commonwealth Government is the sole shareholder of Snowy Hydro Ltd.