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Snowy 2.0: Transitioning to a decarbonised economy

Snowy 2.0 is a pumped hydro expansion of the iconic Snowy Hydro Scheme that could power up to 500,000 homes through a new network of tunnels and power stations. Snowy Hydro’s Gordon Wymer spoke to Quarry about the scheme ahead of his presentation at CMIC 18.

Gordon Wymer is the chief commercial officer of Snowy Hydro, which supplies more than one million homes and businesses with affordable electricity and is the fourth largest retailer in the energy market. Snowy Hydro operates the Snowy Mountains hydro-electric scheme, which comprises nine power stations, along with other power assets, including Lumo Energy, Red Energy and Direct Connect across New South Wales, Victoria and South Australia.

Wymer himself has been involved in the energy industry for two decades. This includes 10 years of energy industry advisory, mergers and acquisition roles at Fay Richwhite and UBS. After advising the shareholders of Snowy Hydro in 1995 up to the company’s corporatisation in 2002, Wymer joined Snowy Hydro in 2003. He is the former chief financial officer and played an integral role in the development of Snowy Hydro’s risk management framework and the company’s evolution from generator to its current position as the fourth largest retailer in the National Electricity Market (NEM).

What are the key messages you will deliver to the audience at the Construction Materials Industry Conference?


"Snowy Hydro is the largest provider of peaking energy generation in the NEM. At times of peak demand Snowy Hydro keeps the lights on."
Gordon Wymer, Chief commercial officer of Snowy Hydro

Snowy Hydro is the largest provider of peaking energy generation in the NEM. At times of peak demand Snowy Hydro keeps the lights on.

With the falling costs of new renewables and thermal generation progressively retiring, the NEM is transitioning to a lower emissions future.

Snowy Hydro’s view is that over the coming decades, the NEM will look and operate very differently to how it does today.

I’ll outline some of the key changes we expect to see across the NEM, and the critical role for Snowy 2.0 in underpinning the stability and reliability of the NEM through the project’s large-scale storage and dispatchable energy capacity.

What is Snowy 2.0? And how does it relate to the existing Snowy Mountains Scheme?

Snowy 2.0 is a proposed pumped-hydro expansion of the Snowy Mountains Scheme (Figure 2) which would add another 2000 megawatts (mW) of energy and 175 hours of large-scale storage to the Scheme’s already significant storage and generation capabilities.

With the NEM rapidly changing, Snowy 2.0 will help underpin an orderly transition to a decarbonised economy as thermal generation retires and more intermittent renewable energy sources come online.

Snowy 2.0’s vast energy storage will be big enough to cover the lengthy periods with low or no wind or solar output. The market has already experienced wind and solar “droughts” over timescales of days, months and seasons. Snowy 2.0 and the existing Snowy Scheme’s ability to store energy in the form of water mean we have on-demand energy ready across days, weeks and even years.

Snowy 2.0 will link the two existing Snowy Scheme reservoirs of Tantangara and Talbingo through underground tunnels and an underground power station with pumping capabilities. The ability to pump and store water means Snowy 2.0 will act like a giant battery by absorbing, storing and dispatching energy (Figure 1). Snowy 2.0 will pump water using electricity at times of low demand and store it in the upper reservoir. At times of peak demand, the stored water will be used to generate and dispatch electricity within minutes. This water can be recycled through the system repeatedly.

The Snowy Hydro Tumut 3 power station, on the Talbingo Reservoir.
The Snowy Hydro Tumut 3 power station, on the Talbingo Reservoir.

If Snowy 2.0 is commissioned, how long will it take to construct the underground tunnels and power station required to link the Tantangara and Talbingo reservoirs?

The first power from Snowy 2.0 is expected in 2024. The complete base case construction schedule is seven years from final investment decision (FID).

Snowy 2.0’s current activities include a geotechnical drilling program. What kind of geology (in terms of rock characteristics) exists across the project route, the key sites and the proposed cavern site for the underground power station?

The geological conditions at the project area are complex. Proposed tunnelling and excavation works would be carried out through around 12 main rock types and eight faults, including the significant Long Plain fault.

Over the life of construction, how much aggregate (in tonnes or cubic metres) will be extracted from the tunnels and cavern site?

With 27km of underground tunnels and an underground power station (the length of two football fields and 12 storeys high) there is a fair amount of excavated rock from the project.

The Snowy 2.0 Feasibility Study estimated about 6.5 million cubic metres of excavated rock, with the final number to be confirmed once the project’s design is finalised. All of the excavated rock will be carefully managed and reused where possible.

Figure 1. The ability to pump and store water means Snowy 2.0 will act like a giant battery by absorbing, storing and dispatching energy.
Figure 1. The ability to pump and store water means Snowy 2.0 will act like a giant battery by absorbing, storing and dispatching energy.

What will be done with bored and blasted materials? Will it be sold as overburden to quarries or recycling plants or used to remediate the project route and sites? Will contract crushing and screening be required on-site?

Final excavated rock placement and management will be determined when current scientific and technical investigations are finalised. This includes a trial program during proposed exploratory works that would see a small portion of the excavated rock tested and placed in Talbingo Reservoir.

Excavated rock placement options in addition to the placement in the bottom of reservoirs include beneficial reuse (in construction materials and road base), as well as placement on land, both inside and outside Kosciuszko National Park.

Will quarries in and around the Snowy region initially be required to supply aggregate for construction infrastructure?

It is too early to determine specific requirements for development of construction infrastructure at this stage.

Your publicity states that Snowy 2.0 in coming decades will not alone be enough to sustain the NEM. How long (in terms of years) can Snowy 2.0 reasonably help to maintain the NEM before other projects will also need to be commissioned?

Modelling by Snowy Hydro and independent economic consultants Marsden Jacob Associates shows the capacity of Snowy 2.0 alone will not be enough to meet the NEM’s demands in the future. From the early 2030s, we expect to need further expansions of the Snowy Scheme (Snowy 3.0 and 4.0). The NEM will need a mix of storage options - household and commercial scale batteries, other pumped-hydro projects, demand management and behind-the-meter solutions will play a role.

Snowy 2.0 can potentially support renewable energy in the NEM. Do you see the potential for other industries, including quarries, to partner with Snowy 2.0 or other electricity market players by supplying their own surplus energy? Could they feed energy back into the grid from the use of solar batteries, wind turbines, or the generation of biofuels to run their plants?

Snowy Hydro is currently evaluating proposals received from an expression of interest process for long-term off-take agreements for 800mW of renewable energy. The response from industry was overwhelming, with proposals for more than 16,000mW of wind and solar.

We expect to look at market opportunities in the future to further expand our generation portfolio.

Figure 2. Map of the Snowy Hydro Scheme, including the proposed Snowy 2.0 project.
Figure 2. Map of the Snowy Hydro Scheme, including the proposed Snowy 2.0 project.

Can extractive industry operators (or suppliers to the extractive industry) tender for aspects of the project? If so, where can they find relevant information?

A workforce plan is being developed as the project progresses to FID and Snowy Hydro is seeking specialist principal contractors through a tender process to carry out the civil engineering and mechanical and electrical aspects of the build. Snowy 2.0 will provide business and employment opportunities across the region and Australia.

Businesses interested in being part of Snowy 2.0 can register with the Snowy 2.0 Business Directory to receive updates as the project progresses. The Business Register will be shared with the principal contractors. Visit snowyhydro.com.au/our-scheme/snowy20/business-opportunities/

Snowy Hydro strongly supports the implementation of the National Energy Guarantee (NEG). What benefits will the NEG provide to Snowy 2.0? Given Snowy 2.0 will indirectly support renewable energy, how does the company respond to criticisms that the NEG could actually stifle renewable energy investment over the next decade?

Snowy Hydro acknowledges the importance of the NEG in achieving a low carbon and reliable energy policy framework. Policy certainty through the NEG would give the energy sector some policy certainty that would help future investment.

In our view, one of the biggest drivers for the uptake of renewables is that the economics are favourable. We’re past the tipping point – building new renewable generation (and adding a price premium for “firming”) is cheaper than the new entrant price of thermal generation.

The energy mix in New South Wales and across all NEM states is changing rapidly, with renewable energy generation increasingly coming online. The need for energy storage and dispatchable generation is growing and will continue to do so, which is why Snowy Hydro is pursuing Snowy 2.0 and considering further expansion in the 2030s.

Gordon Wymer will present on Snowy 2.0 at CMIC 18 at the International Convention Centre, Sydney on 20 September, 2018.



















Tuesday, 11 December, 2018 08:50pm
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