The Federal Government’s announcement of a feasibility study into the expansion to the iconic Snowy Hydro Scheme caught everyone by surprise.
By Clean Energy Council Chief Executive Kane Thornton
Before a feasibility study is completed by the Australian Renewable Energy Agency (ARENA), details of Snowy 2.0 remain scarce. We do know that about 2000 MW of extra capacity has been targeted at a cost of $2 billion over 4-7 years. Much of the project will be for additional pumped hydro storage to help ease the strain on the power system at times when power is extremely scarce.
Such an infrastructure project would be good news for renewable energy, as it will add to the flexibility and responsiveness of our power system.
But while the Prime Minister’s recent talk of the virtues of pumped hydro were a clue about the announcement to come, the two state governments who are also co-owners of Snowy Hydro hadn’t heard much about it until they saw the day’s papers – never something that tends to put people in a cooperative mood.
The tense mood between the state and federal governments was very much on display at an awkward press conference in Adelaide, where South Australian Premier Jay Weatherill unloaded on federal Energy Minister Josh Frydenberg – who was standing next to him in a garage full of reporters. After a handful of blackouts and many months of Federal Government criticism of the state’s electricity problems, the Premier was clearly furious.
Unfortunately the entire energy sector and the business community are relying on our politicians to work together towards national long-term energy and climate policy. Without these foundations, it’s increasingly difficult for businesses to invest with certainty in projects that typically have investment horizons which are measured in decades rather than election cycles. The lack of long-term policy is making it very difficult to anticipate where the energy market goes from here, what happens to wholesale energy prices, how much old generation will retire – and when – and where the price signal comes from for new investment.
So in the absence of long-term policy and strategy you get announcements like Snowy 2.0 and the South Australian Government building their own gas generator. These are essentially direct government intervention in a market that is increasingly unfit for purpose. Until state and federal politicians are prepared to cooperate however, what has been a lost decade in energy investment could potentially stretch on for much longer.
The bit of good news in all this is the Renewable Energy Target, has begun to work in earnest thanks to the complementary support from a number of state and territory government schemes, along with ARENA and the Clean Energy Finance Corporation. Rooftop and commercial-scale solar continues to be installed, and the business case improves every year. And every month more projects reach financial close and prepare to start work.
The unprecedented program of works which will be under construction in 2017 now adds up to more than $5.5 billion in new investment and over 3000 jobs. That’s more than any other year, including the Snowy Hydro Schemes of the past and future.