News

RESPONSE TO NPA REVIEW OF SNOWY 2.0 ENVIRONMENTAL PERFORMANCE

12/04/2024

Snowy Hydro acknowledges and thanks the National Parks Association of NSW’s ongoing attention to matters relevant to Kosciuszko National Park, including the construction of Snowy 2.0.

As a longtime operator of the Snowy Scheme within Kosciuszko National Park, we recognise the park is a sensitive environment with high conservation values that require protection. We continue to seek ways to make positive contributions to Kosciuszko National Park through actions such as road improvements and a $100 million investment to improve the biodiversity and recreational values of the park.

Snowy Hydro takes its environmental management obligations very seriously and we are absolutely committed to ensuring that the construction and operation of Snowy 2.0 is carried out in a manner that is compliant with all applicable laws and project approvals.

The NPA refers to Snowy 2.0 environmental management plans, the project’s Independent Environmental Audits (IEAs), and state government compliance actions.

There are six management plans yet to be approved and these relate to the management of environmental impacts during the Snowy 2.0 commissioning and operations phase only, which is a couple of years away, not current construction activities. Despite this, progress of each of these plans is well advanced and are either awaiting input from relevant stakeholder organisations or are being revised following formal feedback. Snowy Hydro is actively engaging with the Department of Planning, Housing and Infrastructure (DPHI) on the progress of each plan.

Snowy Hydro undertakes more IEAs than are required under the project approvals due to the sensitive nature of the environment and the scope of the Snowy 2.0 project. Of the 12 non-compliances identified from 372 elements assessed under the most recent IEA, none caused any actual harm and all are being rectified as a matter of priority.

The Snowy 2.0 project has been the subject of several compliance actions by EPA and DPHI over the last two years and in each case, important lessons have been learned that have informed improvements to policies, procedures and site practices. Snowy Hydro continues to take these matters very seriously and implement steps to ensure that identified incidents do not happen again.

Snowy 2.0, a pumped-hydro expansion of the Snowy Scheme, will provide 2,200 megawatts of on-demand, dispatchable energy and almost a week of renewable energy storage to help maintain grid security and reliability while enabling Australia’s decarbonisation.

News

SECURING THE FUTURE OF CRITICAL ENERGY TRANSFORMATION PROJECTS

31/08/2023

Snowy Hydro today announced the outcomes of its major projects resets, for Snowy 2.0 and the Hunter Power Project.

Snowy 2.0

Revised total cost to complete is $12 billion. At the end of June 2023, expenditure on the project was $4.3 billion, with 80% of these funds reinvested in the Australian economy.
First power to be delivered in the second half of 2027 and a target date for commercial operation of all units of December 2028.
The fixed-price EPC Contract was executed by Snowy Hydro and Future Generation Joint Venture (FGJV) following Final Investment Decision in a relatively benign and supportive environment. The EPC Contract is no longer fit for purpose.
Snowy Hydro and FGJV are finalising an amendment to the existing EPC Contract to move to an incentivised target cost contract model. Snowy Hydro will also settle all outstanding claims with FGJV.
Delivery of an additional 200 MW or 10% capacity; bringing total capacity to 2,200 MW.
Snowy 2.0 is the largest renewable energy project under construction in Australia and will provide crucial deep storage central to Australia’s renewable transition.
The value of Snowy 2.0 to the national electricity market has increased materially since the Final Investment Decision in December 2018.
Snowy 2.0 will provide 350,000 MWh of energy storage for 150 years.
Snowy 2.0 remains value accretive, with the Company currently projecting a NPV of approximately $3 billion (based on a $12 billion revised target total cost and December 2028 delivery).
Snowy Hydro is working closely with its Shareholder to develop an appropriate capital structure for the Company to support the increase in costs and to maintain the Company’s target credit rating of BBB+.

HPP

The total target cost is now $950 million and will be funded by Snowy Hydro.
The project delivery remains December 2024.
The project remains economically viable on a forward looking basis with the value of its firming capacity clearly demonstrated in the May/June 2022 energy crisis.

Snowy Hydro CEO Dennis Barnes said the project resets will enable the commercially sustainable and successful delivery of both projects.

“I am committed to ensuring these critically important projects are transparent and are placed on a robust and sustainable footing. Moving to an incentivised target model with FGJV will result in closer collaboration, stronger oversight and alignment of interests between Snowy Hydro and FGJV. ” Mr Barnes said.

“Snowy 2.0 is being engineered to deliver clean and reliable storage and electricity generation for Australians for the next 150 years. It is a truly transformative national project that is generating jobs and significant investment in regional areas; it will deliver benefits immediately following its completion and will continue to do so for many future generations of Australians.

“Snowy 2.0 involves billions of dollars of investment, with approximately 80% going into Australian jobs, goods, services and skills. We are building the skills of local workers that can later be used elsewhere to assist in Australia’s ongoing energy transition.”

“The Hunter Power Project is an important project in Australia’s energy transition, enabling the roll-out of wind and solar projects by firming these intermittent generation sources into reliable power,” Mr Barnes concluded.

Fact sheet

Webuild Clough media statement

Background Information

Snowy Hydro today detailed the outcome of the review and reset process for key electricity projects, Snowy 2.0 and the Hunter Power Project.

Snowy 2.0

The estimated total cost for Snowy 2.0 project delivery has been revised to $12 billion, with expenditure on the project to date of $4.3 billion. The terms of the contract with Future Generation Joint Venture (FGJV) are being finalised to move to an Incentivised Target Cost contract model, which will result in closer collaboration, stronger oversight and alignment of interests between Snowy Hydro and FGJV. Snowy will also settle all outstanding claims with FGJV.

The target date for commercial operation of all units is December 2028 with first power to be delivered in the second half of 2027.

Through the project reset process Snowy Hydro has worked with FGJV and hydro technology contractor Voith Hydro to increase the capacity of the power station by 10%. Snowy 2.0 will now deliver dispatchable generation capacity of 2,200 MW, as well as providing energy storage of 350,000 MWh (or 160 hours of generation at maximum output).

The cost revision reflects the compound effect of extraordinary factors. The external factors have impacted major projects around Australia and globally, in particular:

The major disruption caused by the Covid-19 pandemic;
Delayed ability to mobilise, given critical shortages of skilled labour, exacerbated by quarantine and movement restrictions;
Extended and ongoing disruption to global shipping and supply chains caused by the pandemic, conflict and natural disasters, delaying access to key materials;
Significant inflation in costs of key construction materials and inputs; and
Significant inflation in labour costs.

In addition to the external factors, the project has been impacted by:

Design immaturity at final investment decision, with a number of design elements requiring more time to complete due to their technically complex nature. The final design now being more expensive to construct; and
The impact of variable site and geological conditions, with the most impactful being the soft ground encountered that is delaying tunnel boring machine (TBM) Florence’s progress at Tantangara.

Despite the challenges outlined above, the project remains economic. Strong and growing market demand for dispatchable electricity is expected to underpin demand for the services provided by the project well into the future.

Construction of Snowy 2.0 is now approximately 40% complete and solid progress continues to be made, including:

Excavation of the main access and emergency cable and ventilation tunnels is now complete – approximately 6km of tunnelling;
Excavation on the 6km tailrace tunnel has commenced and tunnelling on the 1.45km inclined pressure shaft will commence shortly;
Work on the underground power station is now underway with access available from both ends and excavation and support of cavern crowns underway;
Excavation at the Talbingo intake (where water will enter during pumping and exit during generation) is halfway complete, with 310,000m³ of earth excavated, while the first stage of earthworks at the Tantangara intake are complete, involving the movement of 205,000m³ of earth; and
Manufacturing of the six pump turbines has commenced, the first major mechanical component has been shipped and has been transported to site.

Meanwhile, excavation of the headrace tunnel by TBM Florence is now ready to be continued, subject to the receipt of necessary regulatory approvals.

The project currently has a team of approximately 2,700 Australians dedicated to its safe and efficient delivery. An additional 1,500 jobs are forecast over the project’s lifespan.

Hunter Power Project

The Hunter Power Project has experienced similar challenges to Snowy 2.0 and following a comprehensive review the expected cost is now $950 million. Despite the increased cost the Hunter Power Project remains economic.

Construction continues to progress on schedule, with about 460 people working on the project, which remains on track to be delivered by December 2024.

News

Snowy Hydro welcomes planning approval for Snowy 2.0 Exploratory Works

11/02/2019

Snowy Hydro welcomes the New South Wales Government’s planning approval for Snowy 2.0 Exploratory Works today. The decision, which follows a rigorous environmental and planning assessment process, is another significant milestone in progressing the project.

Snowy Hydro hopes to commence work for Snowy 2.0 soon, subject to Shareholder approval from the Federal Government.

Snowy Hydro CEO Paul Broad said NSW Government’s support for Snowy 2.0 is critical for the security, affordability and reliability of the National Electricity Market (NEM) in the future.

“The mighty Snowy Scheme keeps the lights on across the National Electricity Market at times of peak demand today, and Snowy 2.0 will build on our existing capabilities.

“With more intermittent renewables coming online Snowy 2.0 will create an additional 2000 megawatts of on-demand energy generation and 175 hours of large-scale storage so households and businesses have energy when they need it most.

“Snowy 2.0 will deliver reliable energy at times of peak demand and can ‘fill the gaps’ by generating when wind and solar energy output is low.

“Snowy Hydro takes its environmental responsibilities very seriously. We have a long and proven record of responsibly operating the Snowy Scheme within the national park and we will do everything possible to avoid or minimise impacts from construction of Snowy 2.0.

“Snowy Hydro will provide $10.5 million to offset any impacts from the Exploratory Works,” he said.

The NSW Government, which is responsible for allocating the offsets, has made the commitment that Snowy 2.0 offsets will be used by National Parks and Wildlife Service to support local environmental and recreational initiatives in Kosciuszko National Park.

Exploratory Works involve excavating an exploratory tunnel to gain a greater understanding of the underground geological conditions at the proposed location of the new Snowy 2.0 power station. The works also include upgrades and establishment of access roads, establishment of a construction compound and supporting infrastructure, and other activities.

Almost 50 years ago, exploratory tunnels were constructed for both Tumut 1 and Tumut 2 power stations, the two underground stations in the Snowy Scheme.

Snowy 2.0 will create jobs and economic opportunities across the Snowy Mountains – already more than 50 local businesses have been involved in the project.

In March 2018, Snowy 2.0 was declared NSW Critical State Significant Infrastructure, which provided a clear and well established framework for the project’s planning and environmental approval requirements.

An Environmental Impact Statement for Snowy 2.0 Main Works will be submitted to the NSW Government later this year.

For more information about Snowy 2.0, please visit snowyhydro.com.au.

News

Independent expert report for Snowy 2.0 released

30/01/2018

As part of the feasibility study for the Snowy 2.0 project, an independent expert economic analysis of the changing energy market was commissioned and has now been released.

The report, conducted by Marsden Jacob Associates (MJA), considered the state of the market “with or without” Snowy 2.0. This information and analysis was critical for factoring in the market scenarios and public benefits of the project.

Key findings of the MJA report confirm that Snowy 2.0 would:

Lead to better price outcomes for retailers, customers and large energy users.

Help future proof the National Electricity Market at the least possible cost against the intermittency of wind and solar generation as they continue to grow their market share.

Build on the Snowy Scheme and see greater utilisation of existing dams and increase operating capability.

This expert report follows the release of the 700 page Snowy 2.0 feasibility study, which Snowy Hydro published last December.

Snowy Hydro would like to acknowledge the contribution of Australian Renewable Energy Agency to this report.

The report is available at: https://www.snowyhydro.com.au/snowy-20/

News

Snowy Hydro briefs industry on Snowy 2.0

15/06/2017

Snowy Hydro Limited (SHL) held an industry briefing in Sydney today for a large group of representatives of leading construction and engineering firms on the Snowy 2.0 pumped hydro project.

The industry briefing was told that SHL’s feasibility study was in full swing, with plans in place for geotechnical tests to begin shortly. While it was still early days, the company felt optimistic about the viability of the project and all going well, construction could begin in 2018, subject to the outcomes of the feasibility study.

SHL CEO Paul Broad told the briefing that the Finkel Review’s recommendations of a new Clean Energy Target and Regional Security Obligation offered major opportunities for the Snowy 2.0 pumped hydro project.

Mr Broad said there would be a strong increase in the use of intermittent power in the market – wind and solar – that would require reliable and rapid back-up supply of renewable energy. Snowy 2.0 would help further strengthen the critical role that SHL currently plays in ensuring system security and reliability.

“We are already the largest and most reliable battery storage option for the National Electricity Market. With Snowy 2.0, we will be able to provide an extra 2,000 MW of new renewable capacity and provide increased energy security and stability. This will be crucial as Australia transitions to a low-emissions economy over the next 20 to 30 years,” Mr Broad said.

Mr Broad said the importance of the Snowy 2.0 project was apparent from the participation today by key representatives of leading global and local civil engineering, tunnelling and electrical experts.

“There was strong support for the project from the leading industry players who attended the briefing today, and who are keen to partner with us to deliver this exciting project.There has been nothing like this in Australia since Snowy was completed in the 1970s and we want the best people available to assist us,” Mr Broad said.

Snowy Hydro advised industry that it would be undertaking a three-stage process to procure two packages of services, with one covering civil works and the other electrical/mechanical works.
Expressions of Interest would be called for shortly, with selected suppliers to be shortlisted for an Early Contractor Consultation Phase by late July.

Snowy Hydro Media Enquiries:
Simon Troeth

0439 300 335

e: Simon.Troeth@newgatecomms.com.au