Malcolm Turnbull says the federal government will foot the entire multibillion-dollar bill for the proposed expansion of the Snowy Hydro scheme if necessary, because it will recoup its money and more due to the project’s profitability.
Unveiling plans for the estimated $2 billion, four-year expansion of the iconic hydroelectric scheme, the Prime Minister said he would welcome contributions from the other two shareholders, the NSW and Victorian governments, but it was up to them whether they contributed.
“This is commercial. This will make money for Snowy Hydro. We would look forward to the other shareholders contributing to it but if they don’t wish to contribute additional equity and they would rather the Commonwealth government did that, we are very happy to contribute equity on a commercial basis into this project. That is our commitment,” he said.
While NSW and Victoria offered in-principle support for the plan which was a rare sign of co-operation over energy, the day was overshadowed by an ugly public row between South Australian Labor Premier Jay Weatherill and federal Energy Minister Josh Frydenberg.
It was so rancorous, Mr Frydenberg suggested Mr Weatherill be replaced as leader by state Treasurer Tom Koutsantonis while Mr Turnbull said Mr Weatherill’s “conduct spoke volumes about the Premier’s state of mind at the moment”.
On Thursday night, the Prime Minister also revealed the government was looking a building a second interconnector to SA, which would run from NSW.
There were plans for such an interconnector in the late 1990s but it was cancelled by the-then Liberal state government so it could get a higher price when privatising its generators. That left the state with the lone interconnector to Victoria which was already at capacity.
Snowy Hydro Limited, an unlisted public company is 58 per cent owned by NSW, 29 per cent owned by Victoria and 13 per cent owned by the Commonwealth.
Both the NSW and Victorian governments, who were only told late Wednesday about the plan amid fears the announcement would leak, gave in-principle support but said they would reserve their final decisions until a feasibility study was completed by the end of this year.
“I do hope this spells the end of the lecturing and the bagging of states all the time. Let’s get on and work constructively together in a partnership,” said Victorian Labor Premier Daniel Andrews.
NSW Energy Minister Don Harwin said the expansion, which would add 2000 megawatts to the scheme’s current 4000MW generation capacity, “would be significant and, if viable, a potential game-changer for renewable energy”.
Mr Turnbull brushed aside cynicism from some quarters and said the expansion, which will involve building extra tunnels and power stations between two existing lakes, was provided for when the original scheme was built.
“These projects have been designed a long time ago. They are thoroughly commercial,” he said.
“What we’re doing now, is providing … Snowy Hydro with half a million dollars of additional funding for the feasibility, that will enable them to review the geological studies, review the technology, because it is a lot cheaper to build 27km tunnels now than it was 30 years ago. They didn’t have big tunnel boring machines like we do today.”
The government claimed Mr Weatherill should have waited until the announcement because there was now no need for him to enact his plan announced Tuesday which included a battery storage facility and building, owning and operating a gas-fired power station. This was because some of the extra power could go to SA via the national electricity market.
Mr Weatherill gate-crashed a press conference and exploded at Mr Frydenberg who was in Adelaide to launch a battery storage proposal with AGL because for months, the SA government has been attacked by Canberra over its embrace of renewable energy.
Mr Weatherill attacked Mr Frydenberg as ” an absolute disgrace” who was part of “the most anti-SA government in living memory” which, he said, had been “trash-talking SA’s leadership in renewable technology and they have the gall to stand here next to a renewable energy project and pretend it is happy families”.
“We won’t cop that. We are standing up for SA. We have this $2 billion insult today where money is being spent to keep the lights on in Sydney at a time when we’re facing energy shortages over the coming summer,” he said.
“It is a $2 billion admission that the national energy market has broken and there needs to be public investments to actually fix it up. That is exactly what was at the heart of our plan.”
He called the Snowy plan “a white knuckled panic about national energy policy”
Afterwards, Mr Frydenberg suggested Mr Weatherill step aside for his Treasurer.
“Maybe Tom will be the next Premier of SA because I think after Jay Weatherill’s conduct today, the public would think that is pretty unbecoming and childish and pretty unacceptable for a senior political figure of their state to behave,” he said
Earlier, SA federal Minister Christopher Pyne said the Snowy expansion obviated the need for Mr Weatherill’s power plan.
“If you put 2000 megawatts more into the national energy grid then of course the South Australians who rely on the interconnector from Victoria are going to have more stable supply because there is more in the market.,” he said.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.