The Turnbull Government’s project to expand the Snowy Hydro scheme via pumped hydro-electric technology was originally slated to cost about $2 billion. However, a new feasibility study estimates that the cost could double to around $4 billion; although the study still concludes that the expansion project is “financially feasible” and notes that Snowy Hydro will be able to meet the additional cost via retained earnings and borrowings. From The AFR:
It is understood a feasibility study to be released by the government-owned company on Thursday will show the cost is expected to rise from the original $2 billion estimate when it was announced by the prime minister in March towards the upper end of the $3 billion to $4 billion range.
The study will also confirm the scheme would start producing electricity from 2024, which is still within the government’s initial four to seven-year completion schedule.
Additional costs and a longer construction time are because of “geological challenges” as well as the cost of upgrading power transmission lines.
Complexities include construction of more than 27 kilometres of tunnels and an underground powerhouse cavern.
The study comes after a warning by an expert on climate change mitigation and clean energy last week that the full cost of the energy story project could be as much as $7 billion…
A source said the study clearly demonstrates the project’s viability and its ability to future-proof the National Electricity Market.
Whether this project is a good idea is debatable. The ABC produced an excellent analysis of the pros and cons back in March, which is well worth a read.
My main issue is that the Snowy Hydro expansion was another brain fart of Malcolm Turnbull – announced for political reasons without first conducting an assessment nor consulting with his state stakeholders.
As for where Turnbull came up with the idea, here’s a hint:
