Snowy 2.0 business case update: NPV increases to $3 billion

Snowy Hydro has released an updated business case for the Snowy 2.0 project, increasing the project’s net present value (NPV) to $3 billion. The revised case outlines key revenue sources and highlights the project’s key role in the National Electricity Market (NEM).

In mid-2023, Marsden Jacob Associates was re-engaged to provide up-to-date input to this business case. Despite economic factors remaining unchanged since the Final Investment Decision (FID) in December 2018, there have been several significant updates.

The total cost to complete Snowy 2.0 has increased to $12 billion, and the plant’s commercial launch date is now set for December 2028. In addition, the project will deliver an additional 200 MW, bringing the total capacity to 2,200 MW. This growth is due to greater integration of variable renewables such as wind and solar energy.

Since FID 2018, the project value for NEM has increased from $2.8 billion to $3 billion. Snowy 2.0 remains crucial to achieving NEM’s decarbonization and reliability goals. Snowy Hydro has already secured 1.75 GW of wind and solar contracts, which will enable 2.9 GW of renewable energy projects. The project will support at least another 6 GW of renewable energy by stabilizing intermittent wind and solar power and converting it into reliable electricity.

Snowy 2.0 provides 350 GWh of energy storage, a significant step towards the 640 GWh storage target set by the Australian Energy Market Operator (AEMO) in its 2022 Integrated System Plan. This storage capacity will help absorb excess renewable production and maintain supply during periods of low renewable energy production.

Design updates

Located in the Snowy Mountains in New South Wales, Snowy 2.0 is currently 57% complete with 3,000 employees making significant progress. At Lobs Hole, Lady Eileen Hudson’s tunnel boring machine (TBM) has dug 2km of the 6km back tunnel, while Kirsten’s TBM is due to start work on the inclined pressure shaft. Drilling and blasting work is underway in the power plant’s caves, which will be located 800 m underground and will be one of the largest and deepest in the world.

More than 570,000 cubic meters of material were excavated at the Talbingo Inlet site. At Tantangara the intake is only three meters from its full depth of 55m and a tunnel connecting the inlet and gate shaft is under construction and TBM Florence has advanced to a depth of 850m to the head adit. Progress on the Florence TBM was slowed by hard rock getting caught in the machine’s disc, but a specialist contractor is now using high-pressure water jets to remove the obstructing rock.

The Marica equalization shaft has been excavated to a depth of 85 m, with a planned depth of 250 m. Meanwhile, over 104,000 concrete tunnel lining segments and 450 of the 7,000 custom-made segments for the inclined pressure shaft have been produced at the Polo Flat factory in Cooma.

This updated business case follows changes to the project schedule and costs announced in August 2023.

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