Snowy Hydro says expansion will provide cheaper power than batteries but critics dismiss claims

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Snowy Hydro boss Paul Broad claims that energy produced through the expansion of the massive hydroelectric plant is a much cheaper option than Elon Musk’s battery solutions, but critics have hit back saying the claims are not based on fact.

Mr Broad, who is due to speak at the National Energy Summit organised by the Australian Financial Review this week, said that once expanded to Snowy Hydro 2.0, the plant will be a better solution than Tesla battery storage.

Paul Broad Snowy Hydro
Paul Broad Snowy Hydro

Snowy Hydro is a giant battery in itself, much bigger than anything that Musk is proposing to build, given that its stores of water are huge amounts of potential energy.

Broad is talking up the potential of Snowy after Prime Minister Malcolm Turnbull announced in May that plans for expanding the plant involved a multi-million tunnel project to link two existing reservoirs to boost capacity by 2,000 Megawatts – 50%.

The Federal Government is serious about its plans, wanting to buy out New South Wales and Victorian ownership stakes for more than $5 billion. A feasibility study is currently being carried out and is expected to be complete by December.

Snowy Hydro says upgrade will add $120 per year to bills compared to $4,000 for battery storage – Critics dispute claims

The story was first published in the Australian Financial Review and Snowy’s number crunchers were quoted to have said that the cost of upgrading Snowy to 2.0 would add a total of $120 per year to the average electricity bill by 2027. They claim that Tesla’s solution, on the other hand, would add $4,000 per year to the average bill for the same storage capabilities.

Economies of scale come into it, of course. Tesla’s PowerPack battery, which will be linked to Neoen’s wind farm in Hornsdale will store 100 MW of power, but it is an immediate fix to South Australia’s problems.

Snowy Hydro 2.0, on the other hand, will require huge investment $2 billion for tunnelling and transmission upgrades, plus the buyout fee. It will, however, be a long-term project which eventually aims to double output from 4,000 MW to 8,000 MW.

Turning to Powerwall home storage, the Snowy Boss says that the numbers are stacked even more in favour with pumped storage.  Snowy estimates five fully-charged Tesla Powerwall home batteries provide 70 kilowatt-hours of storage, but this would only last a household 3.5 hours on a hot day if a modern air conditioning unit was running.

They have calculated that Snowy storage costs passed onto the consumer could be as low as $40 a year per household compared to $6000 for batteries. 

Snowy Hydro operates for profit

A Tesla spokesman disputed the figures, saying that Powerwalls cost $8,000 each plus installation costs. They have 13.5-kilowatt-hours of usable storage with a 10-year warranty. Snowy Hydro repeatedly turns to the sheer volume and size of the project, saying that the total amount of water stored in the cache is the equivalent of 12 Sydney Harbours, which would be equivalent to more than 200 million Tesla Powerwalls.

It is also worth noting that Snowy Hydro is a profitable company so how much excess power it deploys for the greater good remains to be seen. Snowy Hydro sells electricity through the Red Energy and Lumo retail brands.

Snowy Hydro doubled its annual profit last year following a surge in electricity demand due to a heatwave in New South Wales in February. Profit before new finance costs and tax was $492 million compared to $203 million a year earlier.

The report, which featured in the Chanticleer section of the AFR was also roundly dismissed by the folks over at RenewEconomy.

Renew took exception at the calculations made and questioned how the supposed experts could come up with a figure of a household air-con unit consuming 70kWh in just three hours. Renew said that on economy mode – an aircon unit would struggle to consume 2kWh in that time. Queensland homes, nearly all of which have air-con, have an average daily consumption of 25kWh.

It said Tesla batteries would power those houses for 3 days at least, even if there wasn’t any sun to recharge them.

Doing some number crunching of their own, Renew worked out that the claim that Snowy Hydro could generate the power of 200 million fully charged Powerwalls is bizarre. 200 million Powerwalls is equivalent to 1000GW – about 30 times more than peak load in Australia, and significantly more than Snowy at its peak.

Renew said the peak could be met by just 7 million Powerwalls – or one in each Australian home, and the household could make big savings on the cost to consumers of grid power. But even that seems a bit off the mark given that at the last check there were some 9 million dwellings in Australia.

Renew said households don’t need 175 hours of storage – around 6-8 hours is more than enough for most to get through the night, and with an oversized PV system on the roof and sensible load management this can be reduced further.

There are quite clearly some uses where battery storage has clear advantages – fast response, network security, short-term, time-shifting emergency backup power, displacing the cost of grid maintenance.

Networks have been putting in battery storage because it is clearly cheaper than upgrading infrastructure, they have been using them in micro-grids to either cut the costs of elongated lines or to provide the cheapest and surest means of grid security.

They are also starting to compete in markets such as energy and frequency control and ancillary services.

Renew said there is a clear case for pumped hydro, whether it be Snowy 2.0, Tassie 2.0, or the projects like Cultana in South Australia, Genex in Queensland, or the myriad community-scale projects.

Storage in Australia’s grid will likely be a mixture of batteries, pumped hydro and solar thermal, and maybe others, and these technologies will dovetail the increasing penetration of wind and solar, and distributed generation.

Renew asked why Snowy is running so scared and mounting such a ridiculous campaign against battery storage? The popular website said Chanticleer  paints Broad as someone who is fighting against “vested interests” and politics but said, “this nonsense from a government-owned utility speaks of exactly that.”

Renew said the argument against battery storage doesn’t add up.

Snowy Hydro expansion will take 5 to 6 years to complete

Snowy 2.0 will take five to six years to build, depending on the drilling rates in the vast tunnels and other engineering issues. That is a long time in a market which is looking for a short-term solution to the energy crisis.

Some see Snowy Hydro 2.0 as a political stunt which is too far away from completion to make a difference when it is needed. Pumped hydro uses electricity to pump water uphill into dams where it can be stored and released when it is needed. This means it is a reusable form of storage that becomes more relevant as the grid increasingly relies on wind and solar generation.

The issue is that the length of time to build the infrastructure in a market where renewables are becoming cheaper all the time. Some of the country’s biggest electricity users in the manufacturing sector are cynical about the impact Snowy Hydro 2.0 will have on their energy needs.

“I just don’t think batteries of the scale they have spoken about in South Australia and elsewhere make any economic sense at all. Why would anyone invest in a battery when it is so much more expensive than pumped hydro?” Broad argues.

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