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Water is Crucial for Snowy 2.0

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Hydropower comes from flowing water and for that you need the key ingredient — water. While Snowy 2 will pump water up and then generate electricy by letting it flow down, its’ water needs are much more than just re-using the same water.

Snowy 2’s profitability depends on keeping water in storage to provide immediate baseload power when the unreliables in the grid go down from inclement weather. What we do know is there’s definitely no water in the high mountains as an insurance policy essential for underwriting the unreliable solar and wind power generation.

All the water in Tantangarra is needed for environmental flows into the upper Murrumbidgee. Water taken from the lower dam, Talbingo, is water owned by other users.

I would have thought a $12 billion scheme that uses water for electricity generation would have already sorted out where that water is coming from, but apparently not! I put questions to the department around water availability, water licences, and agreements. I also asked whether Snowy Hydro has sufficient water allocated to meet its agreed insurance policy against the shortfalls of wind and solar.

The responses suggest the disaster movie that is Snowy 2.0 is still playing Act 1.0.

Transcript

Senator ROBERTS: I want to reference the Snowy Montane Rivers Increased Flows: Safety Management Plan 2022-2027. The plan calls for increased flows into the upper Murrumbidgee in a series of high-flow releases from Tantangara Dam. Page 37 is headed ‘Key issues/considerations’. The very first one refers to an increase of 40,755 megalitres to be released into Snowy montane rivers from Tantangara reservoir. This is an increase of 35,800 megalitres from the 2022-23 water year. Is that correct?

Ms Connell: I don’t have that document in front of me. We can take it on notice to look at that. Given conditions over the last couple of years, I wouldn’t be surprised if there had been an increase from 2021-22 to 2022-23. I would need to take it on notice.

Senator ROBERTS: It seems to be to repair or restore the Murrumbidgee. I am not arguing that case.

Senator McAllister: Senator Roberts, I think you’ve heard the official say that she doesn’t have the document in front of her.

Senator ROBERTS: I will get it on notice.

Senator McAllister: If you did want to ask further questions about that, presumably we can find it. Providing the reference would assist us to do so.

Senator ROBERTS: It is by the New South Wales government. You can have this, if you like.

CHAIR: Maybe table it, Senator Roberts.

Senator ROBERTS: Tantangara storage holds 250 gigalitres. However, Tantangara reservoir has never been more than 70 per cent full in the 23 years to December 2020. This means there has never been water available to generate 350 gigawatt hours of electrical energy. In addition, the long-term average weekly volume of the Tantangara reservoir in the same 23 years is 18.15 per cent, which allows only 32 gigalitres to be used for generation. The long-term average storage available in Talbingo is found to be approximately 33 gigalitres. These new high-surge flows, plus the existing daily water inflow into the upper Murrumbidgee, will account for 100 per cent of the water storage in Tantangara, based on the last 23 years of inflows. There’s no water in Tantangara for Snowy 2.0. Is this correct?

Mr Fredericks: Senator, in fairness to you, the questions that you are asking are really about the business of Snowy Hydro Ltd. I suspect they will be able to give you a high-quality answer to your question. If it is okay, I will take that on notice for them to come back on notice and respond to it.

Senator ROBERTS: I would like you to answer it.

Mr Fredericks: I can’t answer it. I will take it on notice.

CHAIR: Senator Roberts, the officials from the department will answer what they can. In directing your questions, if the questions are about the operation of Snowy, they need to go to Snowy.

Senator ROBERTS: I understand that.

CHAIR: The department can help you, via the interface they have there.

Senator ROBERTS: I understand that, Chair, very clearly.

Senator DAVEY: To be fair, I was at the Snowy hearing. Senator Roberts did ask these questions of Snowy, and Snowy were a bit ambivalent and suggested that he ask the department.

CHAIR: Put them on notice to both sets and then, through the committee, we’ll deal with whether the response covers your questions.

Senator ROBERTS: I want to know because Snowy Hydro 2.0 said, ‘There’s plenty of water in Tantangara.’ Clearly, there is not.

Mr Fredericks: I will take that on notice for Snowy Hydro.

Senator ROBERTS: Thank you. I would like you to answer the question about the availability of water. This is crucial.

Mr Fredericks: That is fair enough. I will take it on notice.

Senator ROBERTS: The water in Tantangara cannot be used for hydro via the existing connection to Lake Eucumbene, which flows into the Murray, or the new Snowy 2.0 connection, which flows into the Tumut and then the lower Murrumbidgee. This means that all the water for Snowy 2.0 will have to be pumped up from Talbingo before coming down. That’s not a problem. We understand that, because with pumped hydro you either start with the water at the bottom or you start with the water at the top and you end up in the same place. My critical question is about the availability of water. Here is the second question. Snowy 2.0 is making one-third of its revenue from selling insurance policies to underwrite the lack of continuity of supply of unreliable wind and solar as generators. The basic idea is that if an unreliable renewable project, like solar and wind, can’t supply its contracted power then Snowy will let the water flow down the hill and generate power for them. One-third of the revenue of Snowy 2.0 comes from insurance, we were told.

That suggests the water must be available in Tantangara year round to provide for immediate electricity dispatch. We’re talking about critical peak hour generation. The water in Tantangara is fully allocated, so water will have to be pumped up the hill and stored against future needs, under these insurance contracts. Some of that will be lost in seepage and evaporation—quite a lot. How has that been dealt with in Snowy Hydro’s water licence? Does Snowy Hydro have a water licence?

Mr Fredericks: I’ll need to take that on notice. In deference to you, I’ll take it on notice for Snowy and for the department as well.

Senator ROBERTS: I would like an answer from your department in particular. We can get it from Snowy. Do they have water agreements?

Mr Fredericks: On notice.

Senator ROBERTS: If they do have any water agreements, are they sufficient to match the insurance policy that Snowy Hydro is going to be getting one-third of its revenue from?

Mr Fredericks: On notice for both—Snowy Hydro and us.

Senator ROBERTS: This deals with water in the high mountains. Thank you very much.

Mr Fredericks: You’re welcome.

CHAIR: Thank you, Senator Roberts. Senator Davey.

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Snowy 2.0 Will Never Dig Itself Out of a Hole

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In Senate Estimates, Snowy Hydro Chief, Dennis Barnes, revealed that the tunnel boring machine, Florence, has finally started boring again after being bogged for most of the last year. Florence became bogged because the planning for Snowy 2.0 was rushed and designed to meet a political timetable under Prime Minister Turnbull. A critical review of the Turnbull thought bubble would have never authorised work to start. The scheme has now run into problem after problem that should have been foreseen.

The bogging of Florence is just one of many problems that has seen the costs rise from $2 billion when announced, to a staggering $12 billion today. This does not include $5 – $10 billion in poles and wires to get the power out. Those lines will carve a scar through the Kosciuszko National Park, which for some reason is okay with “greenies”.

Hydro needs water. If the scheme has to rely only on water being pumped up to the top dam, the scheme will never generate enough power to pay for itself and will become a white elephant. The Snowy Hydro Authority are relying on a 2002 water agreement that gives them access to water, however there are many agreements, notably the Murray Darling Basin Plan, that now lay claim to that same water. It is criminal that the Authority has not sorted out its water supply at this late stage.

In the second video I asked about local information received that the tunnel drilling machine will encounter natural seams of asbestos, which will result in more cost and delays. I was surprised to have this confirmed, as asbestos has not been mentioned so far. I can only wonder what else they are hiding. This project is 100% funded by the taxpayers who I think are about to lose a very large sum of money. It will be cheaper to stop the project now than throw good money after bad.

Transcript

Senator ROBERTS: Thank you for appearing here today. I said in 2018 that this is a dog: no cost-benefit analysis, no transparent business case and no basis. From your January 2024 project update, it seems that Florence has started moving again, drilling the headrace tunnel at Tantangara. How much distance has been made since the machine became bogged?

Mr Barnes: As of this morning, 241 metres.

Senator ROBERTS: How many weeks is that?

Mr Barnes: That’s about eight weeks.

Senator ROBERTS: Let’s move on to the water. Once completed, how much water will the project require to operate, and what will the losses be to evaporation and seepage?

Mr Barnes: The Tantangara Dam reservoir will contain 350,000 gigawatt hours of water equivalent, which is around 700 gigalitres.

Senator ROBERTS: How many gigalitres?

Mr Barnes: Sorry, 240 gigalitres, two-thirds of that. The losses on moving the water uphill and bringing it downhill is in the order of 20 per cent.

Senator ROBERTS: And evaporation and seepage?

Mr Barnes: There’s no additional evaporation caused by the operation of Snowy 2.0.

Senator ROBERTS: I appreciate you can access Talbingo water, but I’m looking at issues around Tantangara, the top dam. Tantangara Dam has a poor catchment design, as I understand it, holds a nominal 250 gigalitres—you said 240—and is currently at 19 per cent capacity, so roughly 47 gigalitres. You must be watching the water closely, since water is essential to your project. Can you tell me the latest capacity and how much of that is that is dead storage?

Mr Barnes: Tantangara reservoir allows us to store 240 gigalitres. Obviously, before we were to operate Snowy 2.0, we would ensure that it was more full than 19 per cent, but there’s no lost storage in effect.

Senator ROBERTS: What is the effective storage that you’re counting on?

Mr Barnes: It’s 240 gigalitres, which turns into 350 gigawatt hours.

Senator ROBERTS: The long-term weather forecasts say it’ll be fairly wet until it starts becoming dry around 2032, when Snowy 2.0 starts. Tantangara, as I understand it, is used to store and release all of the environmental water going into the Murrumbidgee River. What happens if the 40 gigalitres available after dead water—unless there’s another figure in there; dead water being the amount of water that’s basically inaccessible because it’s below the outlet—are required for environmental flow? Who owns the water that you pump from Talbingo to Tantangara? Can you show me the water use agreement between your project, the federal government and the NSW government, please?

Mr Barnes: We don’t own the water; we operate under the terms of our water licence, which is a public document. Perhaps Mr Whitby can—

Mr Whitby: Senator, I think you’re not taking into account the natural inflows that occur into the upper Murrumbidgee, which, from memory and off the top of my head, is about a similar amount to that 240 gigalitres of storage.

Senator ROBERTS: It’s a fairly small catchment, though, as I understand it.

Mr Whitby: There’s still quite a bit of water that comes in there.

Senator ROBERTS: Quite a bit—how much?

Mr Whitby: I just said, off the top of my head, that it’s around 240 gigalitres of natural inflows.

Senator ROBERTS: So that’s in addition—

Mr Whitby: And, additionally, when Snowy 2.0 is operating, depending on the balance between pumping and generation, you can take water out of Talbingo, the lower storage, which is the whole point of the arrangement.

Senator ROBERTS: My understanding is that the Commonwealth Environmental Water Holder owns and controls every drop in that dam.

Mr Whitby: No.

Senator ROBERTS: The Snowy Water Inquiry Outcomes Implementation Deed, SWIOID—which was some years ago—is currently under review based on the upper Murrumbidgee River running dry recently. Will any outcome from that review lead to your water entitlement being reduced or affected in any way?

Mr Barnes: I think it’s too early to say that; it has some time to go.

Senator ROBERTS: That would be a significant risk to the whole project. Surely you’ve done some assessments of it.

Mr Barnes: I think the review will take into account and balance the needs of our stakeholders, including the national electricity market. There are times, of course, where—if we go back to the 2019 drought and bushfires—the flows through the upper Murrumbidgee were higher than naturally would have occurred, as a result of our operations. So it can have a positive effect.

Senator ROBERTS: According to an ABC article, Snowy Hydro has previously stated that the regulation governing water allocations for the scheme is independent of it and that the government owns the water; is that correct?

Mr Whitby: Yes.

Senator ROBERTS: So there’s no agreement at risk here—or anything subject to an agreement?

Mr Barnes: We operate under our water licence. The implementation deed you referred to from 2002 is the instrument that’s under review.

Senator ROBERTS: From 2002—that’s SWIOID.

Mr Barnes: Yes.

Senator ROBERTS: Three weeks ago, the New South Wales government announced temporary water restrictions on Murrumbidgee water licences, specifically water sources I and II, high-flow river licences. Are you confident you’ll always get your water? Everyone seems to be claiming the water—the farms, the towns, the environment—but who actually gets it in the water brawl?

Mr Barnes: I might leave that one to Mr Whitby, but we don’t consume any water.

Mr Whitby: I’m not sure I really understand the question, Senator. Are you asking if we’re confident that we will get future inflows?

Senator ROBERTS: Yes.

Mr Whitby: That’s a matter for the gods; I’ll leave it there.

Senator ROBERTS: So we’re leaving it to the gods.

Transcript

Senator ROBERTS: Of the now $12 billion projected cost, how much of that is private money?

Mr Barnes: I’m not sure I understand the question, but—

Senator ROBERTS: Is it all taxpayer money?

Mr Barnes: Snowy will finance its debt position, because of course we have debt for the purposes of our operating cash flows, from the bank market or the bond market, and I think we’ve been public that the $6 million increase will require some equity support from the Commonwealth. That level hasn’t been determined yet.

Senator ROBERTS: So its component is privately funded; the debt will be privately funded and then paid back through the revenue?

Mr Barnes: Well, we pay a dividend, obviously, to the Commonwealth and over the last 10 years we’ve paid $2 billion in dividends and $1 billion in taxes, so it is an investment that the Commonwealth get a return on.

Senator ROBERTS: I understand that in answer to Senator Cadel earlier on, you said the net present value is now $3 billion.

Mr Barnes: That’s correct.

Senator ROBERTS: Is that with a $5 billion cost or $12 billion cost?

Mr Barnes: A $12 billion.

Senator ROBERTS: Could you provide on notice the price of the power you sell that you envisage? Your selling price? We’d like to get a feel for the cost.

Mr Barnes: The Snowy 2.0 concept is that its revenue comes from two sources: the provision of insurance to all the participants in the market—so that doesn’t have a power price; it has a fee—and then the difference in the cost of pumping the water up, which will likely occur when there is excess renewables, and the revenue from generating electricity as the water comes down. So there isn’t what you would call a translatable energy price that results.

Senator ROBERTS: On what basis is the project calculated to give a net present value of $3 billion? If we could have the basis for that.

Mr Barnes: We’ve done market modelling on those two revenue streams. Bear in mind that that is an activity we undertake today for our current 5,500 megawatts. We have seen increasingly, with the increase in variable and renewable electricity, that the market value of those two services has gone up.

Senator ROBERTS: Can we get access to your costs, please, so that we can understand how the $3 billion net present value is calculated?

Mr Barnes: We haven’t released the detailed business case on the present value of the project.

Senator ROBERTS: So we can’t get it?

Mr Barnes: I think we have taken on notice in the past that we would consider what business case could be provided. But the business case essence is no different to when it originally went to FID.

Senator ROBERTS: A lot of the key assumptions back then were redacted.

Mr Barnes: A business case was released a number of years ago, and all of the same dynamics apply, except that the market for the services we provide has increased.

Senator ROBERTS: Can we get a feel for the revenue from the guarantee—the insurance if you like—as well as the profit on the price difference?

Mr Barnes: I think I’ve said publicly before that—and one can calculate this—the revenue from Snowy 2.0 is in the order of a billion dollars a year. One-third is from capacity sales, and one-third is from a shift in electricity from low-price times to higher price times.

Senator ROBERTS: Minister, it seems to me the taxpayer is taking a big risk here so far with what we’ve seen of the performance of Snowy 2.0. Why can’t the taxpayers see what they’re paying for and the risk they’re being exposed to?

Senator McAllister: I think the history of this project is well understood. We’ve asked Snowy management to take a more active role in assessing and responding to project risk, and we’ve talked already about the reset. I think, as part of the reset, Snowy management—Mr Barnes and his team—released quite an amount of information and the results of their analysis of their position, and they’ve made clear their assessment about the value that sits within the project. If there’s any further information we can provide, we’re happy to consider it.

Senator ROBERTS: Could you take that on notice, please. What are your annual maintenance costs in your net present value calculations?

Mr Barnes: I don’t have the number off the top of my head, but it’s relatively small.

Senator ROBERTS: Could you take that on notice.

Mr Barnes: Yes.

Senator ROBERTS: This is my final question. We’ve heard reports from someone who’s local, so we’re not saying it’s definite—I haven’t got a publication; it’s just reports from a local. Have you encountered natural asbestos as part of land clearing, drilling or construction of Snowy 2.0?

Mr Barnes: I’m not sure we have to date, but we do expect to—

Mr Whitby: I would phrase it as there is a risk that we may encounter naturally occurring asbestos.

Senator ROBERTS: What sort of risk is that? Is it from geology projecting forward? What’s the basis of it?

Mr Whitby: From projection, geological models based on the geological surveying that we’ve done.

Senator ROBERTS: And drilling as a part of that?

Mr Whitby: Correct.

Senator ROBERTS: Where is it, what are the costs, and what delays will this cause?

Mr Barnes: We don’t know exactly where it may occur, but the design of Florence is such that, were it to be encountered, Florence would convert into its closed or slurry mode and be able to handle the excavation. It’s a risk that’s already been planned for.

Senator ROBERTS: So it’s incorporated in the cost?

Mr Barnes: Yes.

Senator ROBERTS: Thank you, Chair, and thank you.

/2 Comments/by

Time to Cancel Snowy Hydro

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The $100-$200 million tunnel-boring machine known as Florence has been bogged in muddy water on soft ground for a year.

I followed up on previous estimate questions, where I was categorically lied to by bureaucrats who were trying to cover up this expensive and embarrassing disaster.

Why is the government allowing executives from the Snowy Hydro Authority to deliberately mislead the committee about the main tunnel being blocked by a boring machine that has not moved in a year? Why did Snowy 2 executives and the government cover up the toxic gas in the tunnel that is coming from the chemicals used to unsuccessfully free Florence?

The cost has now blown out to $12 billion, with another $5 billion needed to carve a 50 metre wide easement through the Snowy Mountains National Park. This is to build transmission lines to take the power into the grid and to upgrade, to carry 2200 MW of power for 20 minutes in the morning and evening peak, which is all Snowy 2.0 will generate.

I look forward to receiving the answers to my Questions on Notice for the Minister.

Transcript

Senator ROBERTS: Thank you for being here again today. Mr Whitby, in the November 2022 estimates, I asked you:I note that the tunnelling machine Florence was bogged up near Tantangara Reservoir. Can you confirm how long it was bogged and confirm that it’s now back in operation? The answer you gave was: The tunnel-boring machine hasn’t been bogged. It encountered soft ground, which we expected. We have been progressing the tunnel-boring machine through that zone with care and diligence. In February 2023, I was reassured Florence was not bogged, and, in May 2023, was advised it would progress shortly. Minister: today, the ABC published photos of Florence clearly in mud and water in a story that says it was flooded in and unable to function from the moment it hit the soft ground a year ago. It moved a matter of metres. Further, the article goes on to say Snowy Hydro authority knew it was bogged even as they testified in senate estimates that it was not. The authority was covering up the machinery to progress Florence. A slurry machine that lays down a base for the machine to travel over was not ordered when the waterlogging was discovered. It was only ordered when Florence became bogged. Why is the government allowing the authority to deliberately mislead the committee?

Senator McAllister: Thank you for the question, Senator Roberts. I don’t quite recall the evidence being provided in the terms that you suggest in your question. But I confess I don’t exactly remember all of the
testimony that was provided at all of the estimates. I will invite Mr Barnes to respond.

Senator ROBERTS: Minister, before you do, were they lying to you? When did you know about the machine being bogged?

Senator McAllister: I will take that on notice. You will understand that I don’t have all of the communications between the authority and shareholder ministers, so I will see what I can provide.

Senator ROBERTS: I would like to know when you found out the machine was bogged, if you made inquiries beforehand, were they lying to you, and whether or not you were misled.

Senator McAllister: I will take those questions on notice.

Mr Barnes: Obviously, there are many engineering terms, but bogged, paused or stuck, all have subjective definitions. There has been no point since Florence encountered this incredibly soft and wet ground in November 2022 that the machine has not been able in some way to move forward. In fact, as part of its stabilisation and commissioning of the slurry treatment plant since December 2022, it has in fact moved 10 metres as part of that activity, so it is not bogged; it is able to move. In May I apologised for my perhaps optimism regarding the ability to get Florence moving at pace again. The full story on the slurry treatment plant is that Florence is going to hit what we know to be naturally occurring asbestos about seven kilometres into its journey.

Senator ROBERTS: Naturally occurring what?

Mr Barnes: Asbestos.

Senator ROBERTS: Do you mean naturally in the strata?

Mr Barnes: Yes, and the slurry treatment plant is designed to handle those conditions. The incredibly soft ground it hit early in its journey was not predicted at that stage, so the slurry treatment plant, which was always
envisaged—just not envisaged that quickly—was ordered and started to be designed as early as December 2022. It is now complete, commissioned. Once we receive an approval from the New South Wales Department of Planning and Environment, we will be able to move forward.

Senator DAVEY: I agree with your recollection, Senator Roberts. Mr Barnes, you spoke in May about the fact that the slurry treatment plant was coming. I took it from that evidence that it would be activated sooner
rather than later, but are you saying it still hasn’t been turned on?

Mr Barnes: To jog your memory, I think I said weeks, not months. I should have said months, not weeks. It wasn’t a mistake, it was my optimism at the time. The physical works to get the slurry plant complete and
Florence able to move. We’ve all progressed. What I underestimated was the process with which to go through the approval process, given the sinkhole that formed in December is just outside our construction boundary.

Senator ROBERTS: Mr Barnes, could you give me on notice the movement of the machine, in metres, between November 2022 and February 2023, between February 2023 and May 2023, and from May 2023 to now?

Mr Barnes: Yes.

Senator ROBERTS: Thank you. Minister, it seems on the face of it that this is government misinformation covering up a massive failure. I’m not blaming you entirely for that, because this whole thing was started under
Malcolm Turnbull as prime minister and Scott Morrison as prime minister. There was no fully disclosed business case. It was heavily redacted. There was no cost-benefit analysis done. The whole thing is based on a false premise. This is what happens when the top is rotten. I’m not referring to you as being rotten, Minister; I’m referring to the project when it was first given the go-ahead. But you’re now carrying the can.

CHAIR: Is there a question?

Senator ROBERTS: Yes. Minister, what questions are you asking about the rest of the project, because this is serious stuff?

Senator McAllister: You are right in this regard: the project as first announced by the Turnbull government does not reflect the dimensions and characteristics of the project as we now understand it. Some of those changes and issues were known to the previous government and not revealed. Minister Bowen has made it very clear how disappointed he was when he came to government and discovered that aspects of the project, including significant delays in cost increases, had not been communicated. As I indicated earlier in my evidence, when Mr Barnes was appointed, the expectation from the shareholder ministers was communicated very clearly to the board and, I understand, through the department to Mr Barnes that we wanted to see this project back on track. We wanted the new management to examine it and provide advice about how to get it back on track. It took some time. It wasn’t possible to do that in weeks; it has taken Mr Barnes some time. When that advice was provided, it was to the Minister, who then sought to communicate it directly to the Australian public. These are complex projects. We accept that. We have noted a constructive tone and a more open approach to communication from the engagements we are presently having with Snowy Hydro, and we hope to see this project—which, as I indicated, is an important project for the energy system and the Australian people—back on track.

Senator ROBERTS: Let’s move to something else that the government has lied about. This might not be ministerial staff or the ministers themselves, but we know that the agency has lied about the toxic gas in the shaft
coming from isocyanate, used to strengthen the ground in the absence of proper machinery—the slurry machine. That was more government misinformation, wasn’t it, Minister?

Mr Barnes: I’m happy to talk to this. You are referring to an incident that occurred in early July. When polyurethane foam, which is sometimes used in front of the tunnel boring machine, comes into contact with water
it can create isocyanate gas. It did so. The incident was reported quickly, access to the site was restricted, additional personal protective equipment was provided and monitoring was put in place.

Senator ROBERTS: What was that personal protective equipment?

Mr Barnes: You can do positive-pressure face masks which stop any gases entering.

Senator ROBERTS: Does that involve carrying air or oxygen?

Mr Barnes: No. I don’t how the reverser flow works, but you picture the large face masks with a positive flow meter. They have a filter. I don’t know the details of how those machines work, but they do protect the individual. We have actually stopped using the polyurethane foam and reverted to grout on that.

Senator ROBERTS: So lives are at stake?

Mr Barnes: Absolutely. This is a complex project with many hazards.

Senator ROBERTS: And the economy is at stake if this project doesn’t live up to nameplate design. How much is Florence worth, and who pays if you can’t get it out or if it comes out as scrap?

Mr Barnes: Florence is not identified as a single item in the project line, but between $100 million and $200 million would be an estimate of a tunnel boring machine. But Florence is able to progress its journey once we
receive the necessary approvals.

CHAIR: We’ll need to rotate the call, Senator Roberts. Do you have a final question? We can come back to you.

Senator ROBERTS: In May I asked about the updated cost, and Mr Barnes replied, ‘We haven’t got an updated cost here and will provide that in months.’ Your updated cost is now $12 billion? Is that it?

Mr Barnes: That’s correct.

Senator ROBERTS: Does that include two major expenses: transmission lines to get the power in and out and the ongoing cost of Florence still being bogged?

Mr Barnes: It is the cost to complete the project to the transmission lines at the power station, including all action necessary to complete the head race tunnel, which is where Florence is.

Senator ROBERTS: So any additional transmission lines needed to take the power out are not part of that project cost?

Mr Barnes: We have one transmission connection from the power station up to the grid, which Snowy Hydro pays for on an ongoing tariff.

Senator ROBERTS: My understanding is that the current transmission lines will not be adequate after Snowy 2 comes in.

Mr Barnes: For snowy 2 to get its full potential, there is an extension to the transmission grid required.

Senator ROBERTS: Thank you. So the total cost of this project—

CHAIR: We need to move on, Senator Roberts. We need to rotate the call.

Senator ROBERTS: Okay.

Senator McAllister: Senator Grogan, I took on notice a series of questions from Senator Roberts. I had previously indicated that these were questions for shareholder ministers and I would take them on notice on their
behalf. I just want to clarify that that’s also what you were seeking in the other questions that you put to me later on?

Senator ROBERTS: I’m happy to get an answer from the government ministers. It doesn’t have to be you; just the person in charge would be perfect.

Senator McAllister: Thanks, Senator Roberts.

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Snowy 2.0 continues to throw good money after bad

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I questioned the Snowy Hydro Authority on the Snowy 2.0 project at Senate Estimates.

Snowy 2.0 is a ‘big battery’ that pumps water from the Talbingo Reservoir up to the Tantangara Reservoir during the day when there is excess wind and solar electricity, then lets the water down during the evening peak to generate electricity when the sun isn’t shining and wind isn’t blowing.

If this sounds like we are planning on generating electricity twice to use it once, that is exactly what pumped hydro does.

The original cost of $2 billion is now out to $5.9 billion and likely to go over $10 billion. In addition, the transmission lines to bring the power into the grid will gouge out national parks and farmland, and cost another $10 billion. And their main boring machine has been bogged for more than a year.

I asked if this project is worth continuing.

The lack of detail around how much the power will cost electricity customers is frightening.

Listen to the answers. It sounds like the Snowy Authority is planning to profiteer by having the only power available when solar and wind are not generating enough power.

All I can say is be worried – this Government is actively planning massive increases in power bills.

Transcript

Senator Roberts: Thank you for appearing again today. Florence is now acknowledged to be bogged. When will it be unbogged?

Mr Barnes: I expect in weeks, not months. As soon as the slurry plant is operating, we’ll push forward, obviously in close consultation with our colleagues at DPIE and Parks, but we expect it to be relatively soon.

Senator Roberts: I empathise with you, having managed underground projects, some quite large—not as large as this one. There is a lot of uncertainty, and it’s hard telling people who are looking on how to think about this. It’s very difficult to describe.

Mr Barnes: You’ve got to see it to believe it.

Senator Roberts: That’s right. We’ve got journalists—admittedly journalists—now saying it’s time to cut our losses on Snowy 2.0. If the project is completed and all the high-voltage transmission lines are built across farmyards and national parks, there must be a calculation that takes the capital cost of the project as a whole and divides that by the life of the project to get a figure for how much the annual amortisation charge for the capital costs will be. Do you have the latest projection, please?

Mr Barnes: There was quite a lot in your question. Obviously we haven’t got an updated cost here, and we’ll provide that in months. We don’t have the cost of transmission, so I wouldn’t be able to provide that. I fully expect, through our corporate plan process, we’ll assess the returns from Snowy 2.0, and, if anything, the commercial case for it has got stronger since FID.

Senator Roberts: Sorry?

Mr Barnes: The commercial case for it has gotten stronger since the financial investment decision.

Senator Roberts: There were many factors that drove that commercial decision in the first place. Well, it wasn’t commercial, from what we understand, because there was no cost-benefit analysis, and the business case was redacted heavily, under Malcolm Turnbull’s prime ministership. This annual amortisation charge, which you can’t provide, is combined with annual costs like labour and maintenance to calculate what the real cost per megawatt hour will be once the project starts. You wouldn’t have the projected cost per megawatt hour either then?

Mr Barnes: That’s correct, but to think about Snowy 2.0 in megawatt hours is perhaps not the right way to think about it.

Senator Roberts: It’s a battery.

Mr Barnes: Yes, but it’s the provision of dispatchable demand over very long storage duration that allows lots of variable renewable electricity to be delivered. So we look at the business case in a much more fulsome way across the whole Snowy business. For example, over the past few years, we’ve procured 1,500 megawatts of solar and wind PPAs to enable the transition, which assets like Snowy 2.0 support. I think you’ve got to look at a whole-of-business business case, and the simple amortisation plus labour is, perhaps, too simplistic a way to consider the business case.

Senator Roberts: Now you’ve got me really worried. It’s not your responsibility with the solar and wind, but now I’m terrified of it. Your website lists the levelised cost of storage at between $25 and $35 per megawatt hour. On 340,000 megawatt hours each year, this suggests an annual cost of $11 million, including operating costs, maintenance, capital costs and the cost of buying the electricity to pump the water uphill. Is the $25 to $35 figure still accurate and, if not, what is the new figure?

Mr Barnes: I’ve not got a calculator that capable in my head, but I think there might be a multiplying factor out on those numbers. The levelised cost of storage I think we have on our website is sourced from international studies and our view of levelised cost of storage. I don’t have the updated figure in my head at the moment.

Senator Roberts: Our staff team did some calculations. Now, admittedly, we don’t have all the costs, but it just seems ridiculously low. When we pile on these extra costs of the delay, we’re wondering about what will happen.

Mr Barnes: Just to be clear, the levelised cost of storage is what one would add to variable renewable electricity to provide a firm product. Also, the 340,000 megawatt hours of storage is not deployed over a year. It will be deployed multiple times through the year, depending on the market dynamics.

Senator Roberts: It seems to us that the capital cost is becoming a huge stumbling block. Even if you take just the cost of the project, at $6 billion—and there are serious doubts about that now—and amortise those across 50 years, the annual capital charge will be $120 million, and double that if you add the pole and the wires. That puts the cost of your electricity at over $700 per megawatt per hour, including the poles and wires. The current spot price for last weekend—admittedly the weekend was cold down here—for last weekend was $150 per megawatt hour. Is there something we’re missing?

Mr Barnes: We’ll certainly do a full financial review of the project when the increased costs are known. But I think you’re mischaracterising the nature of the asset in that it isn’t an energy provider. It’s an insurance provider for when the wind isn’t blowing, the sun isn’t shining or there is plant failure elsewhere. So we don’t sell it as a baseload energy price, which is what you’re referencing.

Senator Roberts: Hasn’t it been touted as a peak period source of electricity?

Mr Barnes: The two major sources of revenue will be the difference between the price we pump the water up to Tantangara, which will soak up demand from solar and wind when it’s not required, and the price at which we sell it in peak periods when solar and wind aren’t available or other plants are not available. So it’s an asset about being there when everything else isn’t. It isn’t sold on an energy basis, which are the reference prices you’re quoting.

Senator Roberts: Okay. But the projected cost must be the single most important KPI of this project.

Mr Barnes: Cost and schedule are my most important KPIs. The reason we came out with the schedule is that there are many stakeholders interested in the schedule, and we’ll work through the cost and associated business plans around that.

Senator Roberts: There seems to be a real risk, though. I acknowledge your point that we can’t just charge per kilowatt hour—or we can’t just recognise a per kilowatt hour figure. But there seems to be the real possibility that the price of electricity generated, recovered and stored will be massive, even without government subsidies coming in year after year.

Ms Barnes: I think that’s for others to comment on. My focus is on getting the project at schedule and cost and making a business case for it, which I think is very strong. There are many other factors which will determine the price of electricity.

Senator Roberts: Minister, can you provide on notice the current projected cost per megawatt hour of electricity generated by Snowy 2.0 on the first year of operation, please?

Senator McAllister: Senator, I will take that on notice. I would also direct you to the evidence given to you already by Mr Barnes in relation both to the variability in the electricity market that Snowy will participate in but also—

Senator Roberts: A lot of variability means uncertainty.

Senator McAllister: Senator Roberts, I think that Mr Barnes has given an indication that he thinks it’s a strong business case and they’re presently working through it. I have taken your question on notice.

Senator Roberts: Thank you. This had nothing to do with your government, but right from the start of this project, Malcolm Turnbull’s government refused access to the cost-benefit analysis and heavily redacted the business case. There have been lots of questions about this project right from the start and now there are even more questions—and I don’t blame Mr Barnes for that.

Mr Barnes: My interest is running a commercially viable and efficient company, and that’s what I’ve done all of my career. The reason I joined Snowy was to get the opportunity to deliver Snowy 2, because I think it’s an incredibly important asset to the energy transition. I fully expect it to be very commercial. We’re trying to deal with the hardest part of the transition, which is providing deep storage to enable more renewables. So I expect it to be a very commercial business.

Senator Roberts: Can I confirm media reports that Snowy Hydro was found in a third independent audit last year to be noncompliant on environmental plans in 15 instances and that you have at last 10 management plans overdue?

Mr Barnes: I think, Senator, that you’re maybe referring to a National Parks Association report that was released last Thursday, without consultation with Snowy Hydro. We are currently operating under all of our construction approvals. So there are no breaches there. The plans and requirements as a result of the construction and operation of Snowy 2 obviously changed in nature over time. There are some that are relevant to construction, and we’re fully compliant with those. There are some that are relevant to operation and some that are relevant to rehabilitation. We work closely with all of the agencies to make sure that they’re reviewed and consulted on in every thorough way. I think there’s been a misunderstanding of some of the dates on various websites. So I have reached out to the National Parks Association to help them understand how it operates.

Senator Roberts: So it’s a misunderstanding that 10 of the 16 management plans for multibillion-dollar pumped hydro projects are overdue by 31 months, as reported in the media, citing the National Parks Association? So you think they’ve got it wrong somewhere?

Mr Barnes: The plans that are being referred to are prepared by Snowy and they are reviewed by various agencies. In consultation with the agencies, some of the dates that were originally envisaged are not being met and, therefore, are phases of the project which are way into the future. One of the things that may be useful for us to do is to work with the various agencies to make that understanding of how this process works. I would have happily taken the National Parks Association through that process.

Senator Roberts: Okay; so they jumped the gun?

Mr Barnes: They didn’t consult with Snowy Hydro before releasing it to the media.

Senator Roberts: Can I go to your opening statement? You recently announced a one- to two-year delay.  That’s a heck of a range, 100 per cent—from minimum to major.

Mr Barnes: It’s a project that’s being constructed over more than one to two years. It’s been in construction a few years. I think it was appropriate to give a range until we do more work.

Senator Roberts: I appreciate your honesty. I am not questioning your honesty—and I appreciate that you have given us that figure. But, for the project, that’s a pretty big number. What was the original planned project duration?

Mr Barnes: It was before my time. Perhaps we’ll come back to you. We gave a notice to proceed in mid-2020 and power was expected in 2025-26.

Mr Whitby: First power was for 1 July 2025, from a notice to proceed from August 2020. So five years was the original—

Senator Roberts: So the delay is 20 per cent to 40 per cent?

Mr Barnes: That would be the simple maths.

Chair: Senator Roberts, I’ll get you to wind it up and share the call, if that’s okay?

Senator Roberts: Okay. You mentioned in your statement the combination of four factors. What are the four factors? I’ve been through your statement and I couldn’t see them.

Mr Barnes: In our advice to ministers and in our media release we identified the effects of COVID and bushfires on the mobilisation of the project, the effect of many global factors on the availability of skilled labour and also the costs of materials. There’s a lot of steel and concrete in the project. We’ve found that some elements of the design—as we’ve gone through the process of design—are, in some cases, more costly to complete. And finally, the site conditions, of which the Florence ground conditions are the most impactful, also includes things like additional eroding. They’re the four factors.

Senator Roberts: Good luck getting that machine out.

Mr Barnes: Thanks.

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Former Snowy 2.0 Boss slams Bowen’s Wind and Solar plan: “Bull***t”

Former Snowy 2.0 boss Paul Broad has just SLAMMED Bowen’s ‘transition to renewables’, calling it ‘bull***t’.

“The notion that you can have 80% renewable in our system by 2030 is, to use the vernacular, bull***t. The truth is, this transition, if it ever occurs, will take 80 years, not eight.”

Couldn’t have said it better myself, Paul.

Transcript

Ben: 17 minutes after 7:00. Well, we’ve said this line a number of times, don’t jump off the boat until you’ve reached the shore, and we say it about Australia’s dramatic switch to renewable energy. We’re switching off coal at rapid rates. The backup plan isn’t ready to go just yet. Take the massive hydro energy project, Snowy 2.0. It’s long been promised to store enough energy for 3 million homes. The project is disastrously delayed and over budget. The former prime minister, Malcolm Turnbull, said in 2017 it would be up and running by 2021. Now they’re saying 2029. It’s gone from a $2 billion price tag to 10 billion, including all of the linked transmission lines.

I wanted to have a chat to someone who knows about this backwards. His name is Paul Broad. He’s one of Australia’s leading experts on infrastructure. Now, Paul Broad was the CEO of Snowy 2.0 for a decade, but his tenure ended shortly after Chris Bowen became the federal energy minister. Paul Broad delivered Mr. Bowen some home truths about how the project was going. He was sent packing shortly after, or maybe he decided to leave. Paul Broad, the former boss of Snowy 2.0 is on the line. Paul, thanks for joining us.

Paul Broad: Thanks. My pleasure, Ben.

Ben: Did you leave or were you shoved?

Paul Broad: Oh, a bit of combination. The word was filtering down. In fact, I think when Bowen was elected, I was dead in the water, so it was only a matter of time. But I formally resigned.

Ben: Why were you dead in the water? What was it that was such a sticking point between where you stand and where Chris Bowen stood?

Paul Broad: Oh, a series of things, particularly the gas plant at Kurri Kurri, Angus Taylor and I were very strong that you needed gas to keep the lights on. And we had more gas in New South Wales than we know what to do with. We need gas. So when the sun’s not shining, wind’s not blowing, gas, hydro are incredibly important. And Chris Bowen was against Kurri Kurri. Then he said we’re going to run Kurri Kurri 30% on hydrogen. There is no hydrogen in the Hunter, and there won’t be for another 10, 20 years at the earliest.

Ben: You were just trying to help, right?

Paul Broad: Well, yeah, trying to help. I think in the 18 months leading up to it, in the senate estimate, the parliament asking us lots of these sort of questions. So you got a sense of where Chris was coming from, and that’s his political view. I respect that, I just didn’t agree with it and there’s no point being somewhere if you don’t agree with it.

Ben: You could have just drunk the Kool-Aid and said, “Oh yeah. No, this is going to be the answer to all of our problems. It’ll be able to carry the load.” But you were being realistic and he didn’t want to hear it?

Paul Broad: Yeah. Plus the fact, the notion that you can have 80% renewable in our system by 2030 is, to use the vernacular, is bullshit. It’s bullshit. Ben, the truth is, this transition, if it ever occurs, it will take 80 years, not eight. So there’s massive changes need to occur. And I’m deeply concerned about the rush, the notion that somehow this is all magic, I’m going to wave a magic wand, we’ll close a big baseload power plant that’s kept our lights on for yours of my life, we’re just going to close it and there’s all these alternatives out there. Well, it’s not. I can be absolutely 100% certain it’s not available, and the transmission lines are miles late. 2.0, which is a part of the thing is late. I think their own reports tell them you’ll need at least eight 2.0s to achieve their goal, and that’s 80 years not eight.

Ben: Let’s just have a look at 2.0. So the biggest issue is these giant tunnelling machines. They weigh 2000 tonnes. They keep falling through the soft ground. Do we know how far along this project is? Is it halfway? Beyond halfway?

Paul Broad: Yeah. Look, I’ve got to defend 2.0, it was a huge part of my creation, and I’m quite proud of the attempt to build a big pumped hydro, but it’s complex. These tunnel-boring machines have got to do through heaps of rock. There’s 28 kilometres of tunnels, 11 metres diameter. And one of them has got to actually bore uphill. So they’ve got to come in and get access to a cabin, and then you’ve got to drill out a cabin, which is 400 metres long, a kilometre under the mountain. So the complexity of this thing is enormous. So I’m not surprised that we’ve got delays. I suppose what worries me more is the lack of transmission.

So you have this big power plant, it’s of no use to you if you haven’t got a transmission line out the front to run it into where the people are. So the lack of transmission is going to be a big, big problem for us. The lack of transmission to bring all these renewables. The power plants we have are just up the road here in the Hunter, all these new renewables are out west or somewhere else. There’s no power lines to get it here. So the notion you can have all this occurring without transmission and all the other investment which will cost the customer, the consumers a lot, the suggestion you can do all that and price is going to come down. It’s just wrong. It’s absolutely wrong. It’s misleading, it’s false and to keep suggesting that, I think eventually, eventually the average punter wakes up, and there’ll be a reaction.

Ben: We’re listening to Paul Broad, the former of boss of Snowy 2.0. Just on the timeline, I actually had a meeting with someone who’s associated with the project about a month or so ago. And I said, “What’s going on with this thing? Because we were told it’d be done by 2021, and now you’re talking about 2027.” And then they said to me, “Oh, it might be late 2027.” And I said, “Well, that sounds to me like 2028.” Now they’re saying December 2029. When I hear December 2029, I think 2030. Realistically, when’s it going to be done?

Paul Broad: Well, the transmission line is ’27, so I suspect they’ll get first power, I suspect… Now something else will happen. I think the challenges for building it are still in front of them. The biggest challenge they have for this whole project is still to come. So there’s lots of risk with it yet, but I suspect, given the fudges the engineers do, I’m suspecting end of ’27, middle of ’27, that sort of timeframe. But Ben, there’s no point having it if the transmission line… So we’ve got to work out, someone’s got to tell us when are the farmers going to agree to run power lines over their properties? When are they going to agree to pay the farmers a reasonable annual sum to access and run their lines over their property? When all that’s agreed and they work out the direction these things are going to come… We haven’t upgraded them in 50 years, let alone in five.

Ben: We’ve spoken to some of those farmers and they’re worried because they say they’ve got to knock down all of these trees to put the lines in. We’re worried about bush fires. And the other issue is just that old line, “It’s my land, it’s my property.”

Paul Broad: Absolutely. Then well what happened, the truth of it, they had all these shiny asses from Sydney rock up to the farms and say, “I’m going to put a power line over your property.” Well, the farmers said, “Get lost. You’re not coming on my property.” It is their livelihood. It is what they live for. So they got off to a really bad start. All the people around Tumut and Gundagai, all those people are now up in arms because these things have got to be done right. You’ve got to sit down and you’ve got to be able to be flexible about the direction you go to minimise the impact on farmers. They had some power lines going right over the farmer’s house.

So there’s still a lot of work to be done on the transmission. There’s still a lot of work to be done on 2.0. And the reports out saying you’re going to need lots of 2.0. So it’s really just the start of the journey. It’s not the end and I think the notion that we can close these plants, no, Eraring can’t, cannot close. Even now, we’re closing Liddell. We’re on a knife’s edge. You watch when it gets really hot or really cold, just how tight it gets in New South Wales. If the lights don’t go out, I’ll be awfully surprised.

Ben: A couple of quick ones, one of the private contractors went into administration in December. We’ve heard there are still unpaid bills to both workers and to ongoing construction.

Paul Broad: Yeah, the contractor’s got a lot to answer for. And I don’t want to go on air and bag a contractor, but they’ve got a lot to answer for. And I think they were trying games by not paying the local small contractors, and as soon I was there, I was prepared to go and pay the contractors ourselves, and then extract it from the big contractor later. The major contractor has safety problems. They tragically lost a life down there a week or so ago. The contractor has a lot of questions to answer. They’re under a fixed-price contract, so these prices shouldn’t be going up, but they are. They’re on a performance-based contract, they’re not performing. There is some big question marks and Clough going broke halfway as well, 12 months ago, it’s been a big problem. The Clough guys were integral part of delivering it. So the contractor has a huge challenge in front of them and they’ve got huge questions to answer.

Ben: Just on question marks, were you hiding some of the delays from Chris Bowen? Because I’ve seen the Financial Review. A spokeswoman for Mr. Bowen told the Financial Review that, “It was no secret that the government was disappointed in the hiding of delays to major energy projects by the former government including Snowy Hydro 2.0.”

Paul Broad: That is just bullshit. The first meeting with Bowen, my first meeting with Bowen, he asked me and I said, “Yeah, 12 to 18 months.” When I was with last meeting with Angus, which was back in April when the contractor rocked into Angus’s office and said that, “We think you’re going to be delaying going [inaudible 00:09:41] cost increase,” Angus kicked him out of the office and said, “It’s got to be delivered on time and on budget.” That’s the truth. I mean why does his office on this political spin? What is he trying to do? Fair dinkum. Why not just tell the truth? It’s really easy. In life, I find if you tell the truth, you can remember it and you don’t get yourself in too much trouble.

Ben: I said at the start of my introduction, that line that a talk back caller said to me once about the switch to renewables, “Don’t jump off the boat until you’ve reached the shore.” Can you reflect on that for a moment before we say goodbye?

Paul Broad: Yeah, that’s absolutely true. We can’t make this transition until we’re absolutely convinced that the alternative’s going to work, and is going to be at a price point that it won’t kill the economy. At the moment, we’ve got neither of those.

Ben: You say the idea of getting to 80% renewables by 2030 is complete BS. You say closer to 80 years?

Paul Broad: Yeah. Well, you got to build these things. Transmission lines, their own reports say you’ll need eight 2.0s or their equivalents. One 2.0 takes 10 years, so get eight. I could do my maths, it’s got to be 80, 70, so it’ll be another generation before anything like what they’re talking about occurs.

Ben: We know it’s never too late to learn a lesson. What would you say to Chris Bowen if he’s listening this morning?

Paul Broad: Oh, take a big deep breath. You’re a minister now, you’ve got responsibilities. You got to put it all on the line and you got to be honest to everybody about it.

Ben: We really appreciate you coming on the line. You haven’t mucked about, you’re pulling no punches this morning, and we appreciate that, Paul.

Paul Broad: Thanks, Ben.

Ben: Paul Broad, the former boss of Snowy 2.0 and I can only imagine the reaction in Chris Bowen’s office right now. They won’t be liking what they’re hearing, but it sounds to me like he’s just given a unfiltered view of Snowy 2.0, and also the transition to renewables. And you heard what he said about the government’s targets, BS. And he didn’t put it the way I just put it then. He’s also weighed into the other issue, which is just so obvious, about needing to keep our major coal plant open. That is something that Chris Minns entertained during the election campaign, and thankfully since winning the election, he suggested that that is a must, that he’s got to work out how we can keep the supply going and keep the prices low. And the discussions are underway with the operators.

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Bogged Snowy 2.0 in a hole lot of trouble

The Snowy 2.0 pumped hydro is one of the biggest disasters in our Government’s history.

Originally budgeted as a $2 billion renewable battery, it’s now estimated it won’t get power to the grid for less than $10 Billion. Despite telling me four months ago that the tunneling machine ‘Florence’ wasn’t bogged (it had “encountered soft ground”) the 7.30 Report tells us in the last 10 months the bogged Florence appears to have tunneled just 150m from its starting point before a 50m hole to the surface appeared on top of it.

All of this for a project to produce the same amount of electricity in a year that the Liddell coal fired power station could make in two weeks.
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PM abandons promise to cut power bills by $275

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While PM Albanese wants electricity-grid wrecking net-zero, he will never be able to deliver his promised $275 cheaper power bills. That’s why he has had to walk away from his first election promise already.

Transcript

As a servant to the people of Queensland and Australia, I support Senator Payne’s matter of public importance. Prime Minister Albanese’s promise to reduce electricity bills by $275 and his promise to reduce carbon dioxide output by 43 per cent are mutually exclusive. High energy prices will reduce energy usage and assist Australia to reach the 43 per cent figure. Lower prices will increase energy consumption, and that will work against the Albanese government’s target. That’s why the Albanese government so quickly ran away from his promise. The Prime Minister never intended to honour the promise, making his action cynical political expediency.

One Nation believes any attempt to implement a 43 per cent carbon dioxide reduction is a policy based on lies and distortions which do not stand up to rigorous scrutiny. Prime Minister Albanese has already signalled, across several issues, his government will be a government based on virtue signalling, not a sensible policy. For senators with no data on their side, the only option is to sell a policy on feelings. Feelings will not keep the lights on, supermarket freezers cold or hospitals open. Feelings will not warm Australians in winter or cool us in summer. Evidence based policy will. Energy deficits in several areas of Australia have already caused blackouts. The 43 per cent target will cause many more blackouts.

Rapidly increasing electricity costs will reduce consumption of electricity and buy the government time, while it asks around for a permanent solution, which is why the government is allowing this to happen. Closing down and sabotaging baseload coal has led to the national electricity racket—sorry market—showing unprecedented wholesale power prices. The average spot price of $264 per megawatt hour last quarter is more than triple the average spot price of $85 per megawatt hour this time last year. Prime Minister Albanese knew this when he made his promise, and clearly economics is not the Prime Minister’s strong suit. If the cost of an item is up 300 per cent, the chances of being able to make it cheaper without the government paying for it are zero.

Perhaps the Prime Minister can extend his employment talkfest to more aspects of government business. Let’s see if anyone knows how to use wind and solar to replace baseload coal and save Australia from electricity and energy Armageddon, because all I’m hearing so far is, ‘Build more wind and solar.’ Building more will simply add more capacity when we don’t need it, during the day, when the sun is shining and the wind is blowing. Solar and wind will need to be paired with some form of battery technology to move that generated electricity from the day, when we don’t need it, to the evening, when we do.

Coal sitting in hoppers ready to generate power on demand is the battery we have used successfully for 120 years. Alternatives to coal are thin on the ground. Battery storage costs are staggering and unsustainable: $1.5 million per megawatt hour. We need around 60,000 megawatt hours of energy in storage to ensure any 24-hour period is not subject to blackouts, yet batteries need 20 per cent above rated capacity to achieve full charge due to heat loss, which is why they catch fire a lot. This means we need 72,000 megawatt-hours of storage, at a cost of $108 billion every 12 years, the life of a big Tesla battery. That is $9 billion every year. The Snowy 2 big hydro battery currently under construction will provide 1,000 megawatt-hours daily for 365 a year at a cost of $5 billion. This means that pumped hydro will cost $300 billion to carry enough power for just one day. Of course, adding electric vehicle charging to the mix means a whole lot more blackouts and a whole lot more electricity price increases.

Net zero is an unaffordable fairy tale that will destroy our standard of living and destroy our lifestyle. We are one community, we are one nation and we know what the hell is needed to get back to affordable, reliable, stable electricity.

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Snowy Hydro 2.0 – The whitest white elephant in Australia

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Despite promises of being one of the world’s largest batteries for only $2 billion dollars, Snowy 2.0 is shaping up to cost over $10 billion and only supply a fraction of promised capacity.

Transcript

As a servant to the people of Queensland and Australia, I speak about the Auditor-General’s performance audit titled, No. 33—Performance audit—Snowy 2.0 governance of early implementation: Snowy Hydro Limited.

Some background for those who may be new to this project: Snowy 2.0 is an extension of the Snowy Hydro project, hence the name. In 2017, Prime Minister Turnbull announced the cost of Snowy 2.0 as $2 billion. This report states that the cost is now $5.1 billion plus billions of other costs, totalling well over $10 billion. The completion date is out to 2025, so we can expect further cost blowouts. The project involves using electricity from unreliable sources like wind and solar to pump water from a lower reservoir, Talbingo Dam, through underground pipes to an upper reservoir, Tantangara Dam. Water is then sent back down to Talbingo Dam, generating electricity on the way. Snowy 2.0 is referred to as a ‘big battery’ because water is stored in the top reservoir until it is needed. The same turbine is either pumping water uphill or generating electricity from the water coming down. The total pipe length is 27 kilometres. Generally, water is pumped up during the day—provided the sun is shining and the wind is blowing. The water is then released down the pipe to generate electricity in the evening peak, when it’s most needed. As the sun does not shine and wind goes quiet at night, pumping water back up the hill overnight, ready for the morning peak, will need coal power. The upper reservoir may hold multiple days worth of water and, at some point, the dam must be refilled, especially as Tantangara Dam is currently only 17 per cent full.

Pumped hydro only works when the dam has water in it. For every megawatt of power generated by water coming down the hill, the turbine needs 1.3 megawatts of power to get the water back up, because of losses. In total, 30 per cent more coal is used in Snowy 2.0. Pumped hydro, put simply, entails generating electricity 2.3 times to be used by consumers once. This is not cheap electricity; it’s actually really expensive electricity. The solar and wind fairy tale needs pumped hydro as a way of storing unreliable wind and power generation, which occurs mostly during the day, and moving that capacity to the evening peek, when unreliable solar and wind can’t provide baseload power.

Maximum generation for Snowy 2.0 is an impressive 2,000 megawatts, but here’s the catch: annual generation is listed in this report as 350,000 megawatt hours. Running at full capacity, Snowy 2.0 will generate electricity for only 175 hours a year. To put that into perspective, my home state of Queensland used 68 million megawatt hours last year. Snowy Hydro will contribute the equivalent of half of one per cent of Queensland’s power each year, one-tenth of one per cent of Australia’s annual generation, at a cost of $5 billion and rising—and that doesn’t include all the costs. This madness will send us broke. There’s a far better way: a 2,000-megawatt coal-fired power station is able to run at 2,000 megawatts 98 per cent of the time, 24/7. Liddell in the Hunter Valley generated nine million megawatts last year.

For less than the cost of this green fairy tale called Snowy 2.0, a coal plant can produce at least 25 times the amount of electricity. That’s why Germany’s Greens coalition government is turning Germany’s coal-fired power stations back on. Shutting ours down when we see what’s happening in the rest of the world is criminal irresponsibility. Prime Minister Albanese is promising reduced electricity prices while at the same time building horribly expensive power generation. The Prime Minister’s agenda will fail, and he will take Australia down with him. Instead, One Nation will build baseload power stations, reduce the cost of electricity, restore grid reliability, restore grid stability, restore Australian manufacturing and restore the income of working Australians.

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