On every count, Snowy 2.0 is a disaster in the making
Ted Woodley The Australian September 18, 2020
A open letter to Scott Morrison and NSW Premier Gladys Berejiklian: Even more revelations have emerged since our correspondence of March 24 that identified many overstated and false claims for the Snowy 2.0 pumped hydro project. Back then we urged a comprehensive review of Snowy 2.0. It is now even clearer that there are numerous alternatives that are lower cost, more efficient, quicker to construct, and incur fewer emissions and environmental impacts.
Regrettably, no review was undertaken, and the Snowy 2.0 main works phase has been approved. Yet substantial evidence continues to emerge that further refutes the core claims of the project.
Details confirm that the Snowy 2.0 business case, issued almost two years ago by Snowy Hydro, was based on grossly inflated revenues and understated costs. Put simply, the federal government was presented with a profoundly flawed justification.
On the revenue side, the output of Snowy 2.0 from 2025 to 2042 is now forecast to be less than half the business case estimate, according to the Australian Energy Market Operator. AEMO forecasts Snowy 2.0 to be largely idle before 2033, as the existing 1800 megawatt Tumut 3 pumped hydro station can provide most of the forecast output from both stations until then. Also, AEMO forecasts Snowy 2.0 would never attain the maximum annual output estimate in the business case.
Not only has output been over-estimated by 100 per cent, Snowy 2.0 is not urgent or critical for the transition to renewable energy, nor itself “renewable”.
On the cost side, the business case estimate of $3.8bn to $4.5bn is understated, also by about 100 per cent. It has been disclosed that the estimate does not include all project costs, and has already been exceeded by a $5.1bn contract for just a portion of the works. Once all costs are added, including the associated transmission lines, we predict the total to be in the vicinity of $10bn.
It is now clear that Snowy 2.0 will never pay for itself. Analysis by the Victoria Energy Policy Centre finds that even Snowy Hydro’s inflated revenue projection will cover only a quarter of the capital cost. The latest AEMO forecast means the gap between revenue and cost is even wider. The owners of Snowy Hydro (that is, all Australian taxpayers) will be liable for billions of dollars in losses, in addition to the $1.4bn already allocated from Treasury.
Further, the cost trajectory for pumped hydro is rapidly trending in the opposite direction to other energy storage technologies. AEMO recently revised its modelling costs, increasing pumped hydro costs by 50 per cent and decreasing battery costs by 30 to 40 per cent, with a further 50 per cent decrease in battery costs by the end of this decade.
Battery costs are plummeting and are likely to continue to do so into the 2030s, crowding out pumped hydro.
This emerging uncompetitiveness of pumped hydro is evidenced by last month’s shelving of the Shoalhaven pumped hydro extension after a two-year assessment concluded it was “not commercially feasible”. It is telling that only one other pumped hydro project has been committed this century.
In contrast, battery projects are being announced almost weekly, of ever-larger capacities, as are major advances with demand management, “virtual” interconnected power plants, hydrogen etc.
The contribution of distributed energy will continue to grow, consolidating the need for smaller, co-located storage, rather than large-scale storage, hundreds of kilometres from load centres.
The financial and technical flaws of Snowy 2.0 are reason enough to halt the project.
An equally compelling reason is the recently revealed magnitude of damage to Kosciuszko National Park. The bulldozed moonscape scar along 5km of the Yarrangobilly River at the Lobs Hole construction site is already visible on satellite images. Much more is to be destroyed across 35km of the park.
Most of the 20 million tonnes of excavated spoil is now to be dumped on parkland rather than in the reservoirs.
No amount of engineered restoration can replace the loss of pristine alpine landscape and wildlife habitat in this internationally renowned location.
Your governments have conceded the inevitability of pest fish and pathogens being transferred from Talbingo Reservoir to Tantangara Reservoir and then throughout the Snowy Mountains and downstream rivers (Murrumbidgee, Murray, Snowy, Tumut).
Native fish and recreational fishing will be devastated. A critically endangered species, stocky galaxias, will become extinct.
Here’s how the NSW Department of Primary Industries describes them: “Stocky galaxias is listed as a critically endangered species. There are heavy penalties for harming, possessing, buying or selling them, or for harming their habitat.” Yet it is now evident that the NSW government has no option but to grant exemptions to its own biosecurity protections to “legitimise” the spreading of declared noxious pests, throughout a national park no less, and beyond — this will be unprecedented.
It has been reported that $1bn has been spent on the project, even though environmental approval was granted only two months ago and the transmission line environmental impact statement has yet to be exhibited. It is well time to cut the losses — there is still $9bn or more to be saved on behalf of Australian taxpayers and electricity consumers.
We again urge your governments to undertake an independent expert review of Snowy 2.0.
Recent information confirms that Snowy 2.0 is not critical, not viable, uncompetitive, wasteful and will devastate vast areas of Kosciuszko National Park. There are far better alternatives.
Yours sincerely,
Ted Woodley, former managing director PowerNet, GasNet, EnergyAustralia, GrainCorp; Steve Blume, president, of Smart Energy Council; Russell Bridge, foundation chair, civil engineering, Western Sydney University; Tim Buckley, director, Energy Finance Studies Australasia, Institute of Energy Economics and Financial Analysis; Dan Cass, energy policy and regulatory lead, The Australia Institute; John Dembecki, former system control engineer, Electricity Commission of NSW, chair Energy Authority of NSW; Bruce Donald, media and environment lawyer; Gary Dunnett, executive officer, National Parks Association of NSW; Roger Evans, former chief electrical engineer, John Lysaght and BHP Steel; Penelope Figgis, vice-chair Oceania, IUCN World Commission on Protected Areas; Sid French, former director, Worley Ltd; Peter Garlick, former director, Queensland Generation Corporation; Peter Graham, former CEO, Pacific Power; John Hancox, former CEO, Clyde Engineering; John Harris, Centre for Ecosystem Science, NSW University; Lesley Hughes, pro vice-chancellor (research integrity and development), Macquarie University; Max Irvine, former head, School of Civil Engineering, NSW University; David Iverach, former CEO, Transfield Energy, director general, Transport NSW; Paul Lopert, former senior manager, Energy Authority of NSW, EnergyAustralia; Ian Lowe, Science, Technology and Society, Griffith University, former president, Australian Conservation Foundation; Gavan McDonell, former sole commissioner, NSW Enquiry into Electricity Generation Planning, and development, senior economic consultant, National Electricity Market; Bruce Mountain, director, Victoria Energy Policy Centre, Victoria University; Hugh Outhred, former visiting fellow in energy systems, NSW University; Nancy Pallin, bushcare volunteer, Kosciuszko National Park; Rob Pallin, former chair, Nature Conservation Council NSW; Ron Quill, former senior executive, Sydney Water, director, Integral Energy; Bruce Robertson, energy finance analyst Gas/LNG, Institute for Energy Economics and Financial Analysis; Bruce Robins, former head project development, BP Solar International, energy adviser, Federated States of Micronesia; Jim Ryan, former engineer, Snowy Mountains Hydro-electric Authority, executive engineer, Snowy Mountains Engineering Corporation; Hugh Saddler, Crawford School of Public Policy, ANU; Max Smith, former general manager retail, Great Southern Energy; Andrew Stock, councillor, Climate Council, former executive, Origin Energy; John Webb, Environmental Geoscience, La Trobe University; Robert Wheen, former head, School of Civil Engineering, Sydney University; Don White, engineering, University of Sydney, chair, Nature Conservation Council NSW; George Wilkenfeld, director, energy policy consultant; Graeme Worboys, Fenner School, ANU, former regional manager NSW NPWS (incl. Kosciuszko National Park), co-author, Kosciuszko: A Great National Park.
