Snowy Hydro 2.0 was, I thought, being justified at the political level by its capacity to back up with pumped storage some of the “reckless” development of wind and solar energy around the place. RenewEconomy now reports that Snowy Hydro is itself planning to develop 800 MW of wind and solar capacity. It has put out an expression of interest document, aiming to conclude contracts by September:
- “The initial aim is to procure 400MW of wind and 400MW of solar off takes,” the document states, although the company may change its mind on the 50/50 split between wind and solar depending on the offers made.
“Snowy Hydro’s goal is to construct a portfolio of wind and solar offtakes such that the resulting portfolio benefits from diversification of fuel sources (wind / sun), geography (across NEM States, latitude and longitude) and supply profile (intra-day, week, month and season).”
I would have thought it more economic and appropriate to back up geographically dispersed wind and solar facilities with pumped storage nearby. However, rooftop solar is starting to become a significant resource and is happening everywhere. In March NSW had 1.47 GW of rooftop solar capacity, which in May grew by 39 MW.
Rooftop solar is becoming disruptive, producing dips in network demand during daytime peaks.
- one third of homes in Queensland and South Australia had rooftop solar, 25 per cent in Western Australia and 17 per cent in NSW (and growing fast).
This compared to just 20 per cent in Hawaii and California, often seen as the global leaders in the uptake of rooftop solar.
So thought is being given as to how it should be managed and integrated with network electricity. In the next few days Energy Networks Australia and the Australian Energy Market Operator plan to release a joint study about the appropriate platform to manage the growth in distributed energy.
- Companies like Greensync, Reposit, Tesla, and sonnen have ideas of how that can be done – through the creation of virtual power plants and other “aggregated source” that links and connects these resources.
The NSW government seems intent on running trials about managing distributed energy. Will they think of the potential of Snowy 2.0? Professor Andrew Blakers said the Snowy 2.0 would be able to supply 2 GW of electricity for two weeks, or around 350 GW hours. However, there is no evidence I have yet seen that the Commonwealth or Snowy Hydro are considering the possible role of backing rooftop solar. Snowy management seem keen to strike agreements with large-scale wind and solar generators. The costing from their documents runs like this:
- “On that firming product we have wind at about $40, and us with a firming product of around $40 as well—around $80. Those costs are coming down rapidly.”.
These estimates are backed up by new documents released by Snowy Hydro that suggests wind (including a price premium for firming) is approx $70 – $80/MWh, and solar with a price premium for firming is about $77 – $99 per MWh.
This compares to the price of new coal plants of $78 – $120/MWh depending on capacity factor, and the cost of gas, assuming sufficient quantities can be sourced on existing infrastructure, of $100-$125/MWh.
Andrew Blakers Youtube (see about 23:50) puts the cost of firming renewables with dispersed pumped hydro as follows:
Blakers’ estimated costs come in at less than $5 MWh until the system reaches over 60 per cent renewables, and tops out at about $25 with 100 per cent.
Snowy Hydro has significant financial grunt, as it is becoming a major force in the electricity generation market:
- it owns and operates the 4,100MW Snowy Mountains Scheme, the 300MW Valley Power gas-fired power station, the 320MW Laverton North gas-fired power station and the 667MW gas-fired generator at Colongra in NSW.
It also owns and operates diesel fired peakers in South Australia, and since the purchase of Lumo Energy (to add to Red Energy), it has become the fourth biggest energy retailer in the National Electricity Market.
The article says “retailer”, I think they mean “generator”.
Meanwhile Origin has announced electricity price reductions in Queensland and South Australia, and a freeze in NSW and the ACT. Victorian prices change from the beginning of the year, rather than 1 July. Frydenberg says wholesale prices have come down by 30 per cent. Remembering that the actual electricity only forms 25 per cent of the bill or a little under, a price reduction of 1.3 per cent in SEQ seems mean, considering there was a 15 per cent increase last year. Here’s a table of the price changes:
Frydenberg, talking to Patricia Karvelas, got away with saying prices were reducing because prices were reducing and then went on to mention a range of factors including Snowy 2.0, virtually claiming the credit for the government. Renewable energy did not get a mention.
Origin Energy talking to Steve Austin, said prices were reducing because of renewables. Other factors were mentioned. The SEQ network distributor Energex has reduced its charges, and the government instruction to the state-owned generators to lower their bids had an effect. However, the Origin representative thought we might be at a turning point where future investments in renewables would continue place downward pressure on costs and prices.
Frydenberg and Malcolm Turnbull sing from a different song sheet, consistently blaming a reckless plunge renewables for all the electricity sectors woes, citing Snowy 2.0 as a responsible remedial action. Unfortunately Frydenberg’s regular use of spin means that you can’t take at face value anything he says.
To bring all this together, the Commonwealth now owns a large and significant electricity generator, and by buying out NSW and Victoria, seem committed to a massive pumped hydro scheme which is shaping as hopelessly uncompetitive and seems destined to crowd out cheaper and more appropriate investment in pumped hydro and other levelling technologies.
Snowy Hydro’s brief no doubt is to maximise the dollar return to their shareholder, the Commonwealth of Australia. In Frydenberg we have a minister who undoubtedly has a brain, but seems not to be applying it to resolve the best use of a large asset in the public interest.