What’s going on with Snowy Hydro 2.0?

What’s going on with Snowy Hydro 2.0?

The federal government’s biggest renewable energy project, Snowy Hydro 2.0, has been back in the news lately due to a massive cost blowout. It’s now set to come online in 2029 - 8 years later than planned - so in this Squiz Shortcut we thought we’d get you across:

• The Snowy Hydro Scheme

• How Snowy Hydro 2.0 fits into the government’s energy plans

• And why it’s become so costly

🙋🏻‍♀️ This newsletter was written by Larissa Huntington

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Squiz the Shortcut

Let’s start with the basics… What’s the Snowy Hydro Scheme?
Lots of us know Australia’s Snowy Mountains region for beautiful scenery, snow sports in winter, and trout fishing/mountain biking in summer. But it’s also home to the Snowy Hydro Scheme, one of the country’s biggest sources of renewable energy.

How big is it?
Enormous… It’s made up of massive dams and reservoirs, power stations and rows of pipes that stretch over the land and mountains. And that’s just what you can see above ground - there’s also a network of tunnels and caverns underneath the ground that hold giant turbines, which are spun by water rushing downhill to make energy.

Why was it built in the mountains?
To capture the water when snow melts and put it to use. And that brings us to its history - it’s not a new scheme. It was built between 1949 and 1974 for the initial purpose of moving water from the Snowy River inland to drier regions for farming. 

Tell me about the OG project…
More than 100,000 workers from over 30 countries helped build it, and when it was completed there were 7 power stations, 16 major dams, 80km of aqueducts and 145km of interconnected tunnels. It was, and still is, acknowledged as a major engineering achievement in our history. 

How much power does it generate?
Roughly 4,500 gigawatt-hours of renewable energy a year - that’s enough to meet the annual electricity needs of around 800,000 average homes (equivalent to nearly all the homes in South Australia). It also helps to quickly plug gaps in the energy grid when there’s peak demand across the eastern states. And it still funnels water into the Murray and Murrumbidgee Rivers to help with inland irrigation. 

Has it changed much?
Since 1997, it’s gone through some corporate changes and expanded to include 16 power stations, the retail energy businesses Red Energy, Lumo Energy and Direct Connect. It also has several gas and diesel operations under its belt. And in 2017, the then Turnbull Coalition Government announced plans to expand it…

Who owns it?
It’s now fully owned by the Australian Government under the name Snowy Hydro Limited. It’s a big part of the push to transition to renewable energy in line with Australia’s commitment under the Paris Agreement to achieve Net Zero emissions by 2050. As a quick reminder, we’re aiming to balance the amount of harmful greenhouse gases we emit into the atmosphere with the amount that we remove. 

Tell me more about that…
Under the plan, Australia’s ageing coal-fired power stations will eventually close down. Coal has historically provided steady, continuous power. But as those plants retire, the National Electricity Market (NEM) faces massive supply gaps that will have to be filled by a new source of reliable, on-demand energy - and this is where that expansion, called Snowy Hydro 2.0, comes in… 

What’s Snowy Hydro 2.0?
We’ve covered how the original Snowy Hydro Scheme was designed to generate power from natural water sources like snowmelt, rivers, lakes and dams. Snowy 2.0 is going to complement that by acting as a giant, rechargeable battery for the energy grid.

How will it work?
It’ll do this using a process called pumped-hydro energy storage. So, instead of waiting for rain or snowmelt to fill up a dam naturally, it’ll use a closed-loop system to move the same water back and forth between two large reservoirs at different heights: Tantangara Dam (the upper reservoir) and Talbingo Dam (the lower reservoir).

Talk me through it…
The process works in 2 distinct cycles. The first one charges the battery. When Australia is producing more electricity than it needs (usually during bright, sunny days when millions of rooftop solar panels are flooding the grid with cheap energy), Snowy 2.0 will use that excess power to turn its turbines in reverse. 

Just explain that…
The turbines act as massive pumps, sucking water out of the lower reservoir and pushing it up through 27km of deep underground tunnels into the upper reservoir to be stored. It’s called gravitational potential energy. 

And the second cycle?
That’s for generating power. So when electricity demand spikes, like when everyone turns their lights on at night or on a hot day when lots of aircons are running, the system kicks into gear. The gates at the upper reservoir will open, and gravity pulls the water back down through the underground tunnels. The rushing water spins those massive turbines at high speeds, quickly generating enough electricity to feed back into the grid to keep lights (and aircons) on across the eastern states. That water will then stay in the lower dam, ready to be pumped back up the next time there’s cheap surplus renewable energy on the grid. 

How much power will it generate?
Once completed, it’ll be able to generate up to 2,200 megawatts of power at a time, and store enough energy - the equivalent of about 26 million household batteries - to power 3 million homes for a week.

Where is Snowy Hydro 2.0 up to?
It’s being described as one of the most complex and challenging feats of engineering underway in the world, linking 2 existing dams through those tunnels we described and an 800m-deep hydroelectric power station at a remote place called Lobs Hole. Reports say overall it’s nearly 80% complete, but it hasn’t exactly been smooth-going…

What’s gone wrong?
The biggest issue has been with the tunnelling. Only about 65% of that is finished, and it’s mainly down to the Tunnel Boring Machine (TBM) that was being used for most of the project getting stuck in soft ground. If you haven’t heard about this, the machine is named Florence (not because of Florence and the Machine which was our first guess…) after Australia's first female electrical engineer Florence Violet McKenzie. It’s 143m long but only about 150m into her 15km excavation journey, she got stuck in wet ‘mushy’ rock and mud - for nearly a year.

What happened?
Basically, she got seriously bogged. There’s been a lot of finger-pointing since about whether the original geological surveys were adequate, and critics say that the project was rushed through before the design and ground conditions were properly understood. Then more issues plagued Florence…

What was next?
Before she got going again, a sinkhole opened up above her, then efforts to stabilise the earth triggered a gas leak which forced emergency evacuations. Even after she was restarted, there have been repeated stalls through the tough terrain - the latest one (due to a cracked drill head) has lasted more than 3 months. 

Are there other TBMs working on the project?
There have been 4 working on the project at various stages. We know you want to know the other names too… There’s 'Kirsten' named for astrophysicist Kirsten Banks, 'Lady Eileen Hudson' in honour of the wife of Snowy Hydro's inaugural commissioner Sir William Hudson, and ‘Monica’ named for local high school student Monica Brimmer who won a regional art and storytelling competition with the prize of having the fourth TBM named after her.

Why do they all have female names?
It’s an old mining custom, and a nod to Saint Barbara, the patron saint of underground workers. But St Babs hasn’t saved the project from a cost blowout... Those delays, along with worker strikes over safety conditions and pay disputes, and a restructure of the original contract from a fixed-price one to a ‘cost-plus’ one, have all contributed to extra costs of around $20 billion. It was originally pitched to the public at a cost of $2 billion. Now it’s set to cost upwards of $22.2 billion, and the government is allowing $25 billion to get it over the line. 

So, when will it be completed?
The finish line is projected to be in spring of 2029 - 8 years after it was due. Energy Minister Chris Bowen reckons it’ll be worth it for taxpayers in the long run. He says Snowy 2.0 will reduce wholesale electricity costs by $7 billion over the next 50 years by preventing peak price spikes.  

What does Snowy Hydro say?
CEO Dennis Barnes faced a grilling over the latest figures at a Senate estimates hearing this week, but he maintains that the scale of the project’s energy storage is world-leading and that over half of the total energy storage that the grid needs by 2050 will come from it. He also says replacing Snowy 2.0 with large chemical batteries for the grid would cost $80 billion.

And the critics?
Bowen is under pressure from the Coalition to release the full cost report publicly to justify the huge price tag. Coalition leader Angus Taylor has criticised the government’s management of the project - particularly on the financial front and says Bowen should lose his job over it. And One Nation has called for the whole project to be abandoned, saying it’s a waste of public money given that coal-fired power stations can be built for a lot less and they provide baseload power. 

So what happens now?
Under the current federal government, abandoning it isn’t likely to happen, so for the time being, it’s over to Florence and the other machines to finish the job… 

Onto our Recommendations

Watching: This Four Corners story drills into some of the challenges faced by Snowy Hydro 2.0

Reading: What Snowy Hydro CEO Dennis Barnes had to say about the cost blowout in Senate estimates.

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