Malcolm Turnbull wants to spend $2 billion to build Snowy Hydro 2

Snowy Hydro’s Murray 1 power station. Photo: Simon Thomsen

Prime minister Malcolm Turnbull will unveil a proposal to spend $2 billion to increase the capacity of the Snowy Mountains Hydro-electric Scheme by up to 50%.

The PM, who has expressed enthusiasm for pumped hydro in recent months as the federal government grapples with a growing national power crisis, is expected to announced the plan to upgrade government-owned power generating network, which includes nine hydro-electric power stations and 16 dams connected by tunnels and aqueducts, will announce his plan at Snowy Hydro this morning, according to Fairfax Media.

Pumped hydro involves sending stored water back up the hill to a storage dam using power from other sources during off peak periods, ready for reuse in hydro generation when demand grows.

The government wants to add around 2000MW of capacity – more than Victoria’s Hazelwood coal-fired power station, which closes later this month – enough to power 50,000 homes by adding additional tunnels for more pumped hydro in the first major upgrade to the scheme since it was completed in 1974.

The idea for more pumped hydro has been on the scheme’s drawing board since the 1980s. The company is minority-owned by the Commonwealth, which has a 13% stake, alongside major owner the New South Wales (58%) and Victorian (29%) governments, leaving Turnbull, who has been repeatedly critical of NSW and Victoria for their energy policies, facing some tricky negotiations with the states if he wants them to contribute to the upgrade.

The business generates revenue of around $1.2 billion annually and acts as something of an insurance policy in the national electricity market, adding power to the system when demand is high. A push to privatise the business in 2000s by the NSW and Commonwealth governments was abandoned in the wake of widespread opposition. A 2014 the National Commission of Audit again recommended in the Coalition government sell its stake, but an investment like this would delay any privatisation until at least the mid 2020s.

The upgrade is expected to take several years to complete, with work not getting underway until late 2018 for completion by around 2022-23. A feasibility study will get underway this shortly to be completed by the end of this year.

Fairfax says that under the Turnbull plan, no new dams would be built, but instead new tunnels will improve the ability to utilise pumped hydro. New power stations are also being proposed at a cost of between $1.5 and $2 billion. The Australian Renewable Energy Agency will drive the project looking for expansion sites.

The proposal would nearly double the existing 2.24MW of pumped hydro available on Australia’s east coast, including the Snowy’s 1.5 MW Tumut 3 generators, a 500MW plant at Brisbane’s Splityard Creek Dam and the 240MW at the Shoalhaven Scheme, south of Sydney.

Fairfax has more here.

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