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Snowy Hydro: A Wasteful Project

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According to information from the crew working on Snowy Hydro, the reason the Florence tunnel boring machine became jammed while drilling a bend is because it was used for too long between scheduled maintenance. This practice reduces production costs and increases boring rates, however as the cutting wheels wear down, the tunnel is cut to a narrower width. In this case, the machine jammed on a bend where the full width was needed for clearance.

I asked about this at the last Estimates and received a partial admission that the jam was due to worn cutting wheels, but that it was a one-time occurrence. I have requested the maintenance logs for Florence to determine if this was indeed an isolated incident or part of a wider problem.

One Nation believes the Snowy Hydro project is a fool’s errand. While the sunk cost (money spent so far) is around $4 billion, completing the project will cost an additional $20 billion. This does not include the drilling region, which is full of asbestos – a can of worms yet to be addressed.

Another problem is that the electricity from Snowy 2.0 is being sent to Victoria and South Australia via Hume Link, which began construction this week. Hume Link involves putting two high-voltage power lines (two towers) across 360 km of bushland, which will require clearing, as well as farmland and forcibly reclaimed private property. This will cost another $5 billion.

All this expense just to provide firming of unreliable wind and solar power, when a zero emission coal plant could do the same thing for a few billion.

Transcript

Senator ROBERTS: I don’t know if this was asked before, but is Florence moving?

Mr Barnes: Yes.

Senator ROBERTS: How long has she been moving?

Mr Barnes: She has been moving in a more predictable fashion since July and a total length of 1.6 metres and we are now achieving—kilometres. That was true a year ago. We’re now achieving the rates we need to achieve the target date of December ’28.

Senator ROBERTS: How far has it drilled since July?

Mr Barnes: I would have to come back to you on that specific.

Senator ROBERTS: Okay. Can I ask about maintenance on the tunnel boring machines. I understand a cutting head inspection must be performed every mere six to eight metres, stopping every two metres for concrete
behind. Is that a fair statement of the normal operation of a TBM?

Mr Barnes: The way the TBM advances is that it excavates a two-metre length, and the concrete segments that form the tunnel lining are then placed into the—the circumference of the tunnel. And that takes about 40
minutes, typically. So in that 40-minute period someone will inspect the cutter head to make sure that they can then do the next two metres. Periodically, we stop it for longer and do maintenance and replace some parts.

Senator ROBERTS: As I understand it, weekends are normally used for the inspections on the cutter head.

Mr Barnes: Snowy 2.0 is a 24/7 operation, so it happens as it occurs. So if it was a Wednesday evening when we have to do some maintenance, that’s when we would do it.

Senator ROBERTS: How long has it been 24 hours?

Mr Barnes: Since the start of the construction.

Senator ROBERTS: Since the start. Okay. Thank you. Is it true that the cutting wheels were not replaced at the correct time sometime in the last few months and that the tunnel is, as a result, being built to 11.4 metre
width?

Mr Barnes: The tunnel—

Senator ROBERTS: I think the specification is 11.5.

Mr Barnes: I can’t remember the exact figures, but the tunnel boring machine does construct a circumference which is over 11 metres and then there is ground and a concrete segment that brings the interior of the tunnel to just under 10 metres.

Senator ROBERTS: What are the specifications on the drill before you put the lining? Is it 11.5 or 11.4?

Mr Barnes: It’s just over 11, I think is the number.

Senator ROBERTS: Just over 11?

Mr Barnes: We can come back on notice but it is over 11 and then the internal circumference is under 10 because—

Senator ROBERTS: I would have thought they would be very important specs.

Mr Barnes: Well, they are very important specs but I don’t keep every number in my head.

Senator ROBERTS: No, I understand that, but that would be fundamental to the project, wouldn’t it?

Mr Barnes: Yes, they are fundamental and we have an international design joint venture of Tractebel and Lombardi who have signed off on these as specifications that will last 150 years.

Senator ROBERTS: Is there anyone in the room who knows what the designed cutting diameter is? 11.5, 11.4?

Mr Barnes: No.

Senator ROBERTS: No one?

Mr Barnes: No, but we can provide you that information on notice.

Senator ROBERTS: So, as I understand it, the cutting width spec is 11.5 and that because the cutting wheels were not replaced at the correct time, the tunnel as a result is 11.4, which caused Florence to get wedged on a
bend. Is that correct?

Mr Barnes: That’s not because of the design characteristics. There was a period in May when we hit very hard rock as we were going around a bend, and that hard rock wore down the edge cutters quite dramatically. I think that happened—I will get these dates wrong, but it happened on a Thursday. We were public on the Friday with that information, and on the Monday we had a specialist crew on site who used high-spec water blasting to relieve that pressure. Florence has now moved forward and is on the straight so doesn’t have any corners to deal with.

Senator ROBERTS: So for clarity, you are saying that Florence never cut a width of less than 11.5. I just said that the spec was 11.5 and the reason it became stuck on a bend was not because the tunnel was being cut to a lesser width, 11.5, as a result of overextending the life of the cutting wheels to speed up excavation?

Mr Barnes: No.

Senator ROBERTS: Okay. Could you please provide the maintenance log on notice of inspections and replacement of the cutting wheels on Florence for the last two years?

Mr Barnes: Probably. I’m not sure what that would help the minister with—

Senator Ayres: We will take that on notice, if we can, and see whether that is something that we can sensibly provide.

Senator ROBERTS: Swinging quickly to Kurri. What is the completion date of the Kurri gas pipeline? I understand the power station will have to burn diesel until the gas pipeline is connected. Is that correct?

Mr Barnes: The current schedule is for the gas infrastructure to be completed by 10 March.

Senator ROBERTS: 10 March next year. Where is the gas coming from and how secure is your supply over the timeframes of 10 years and 25 years?

Mr Barnes: So we rely on a gas portfolio drawing on the national gas grid. We have a range of contracts. Sometimes we access the wholesale market on the day. We announced earlier this year that we had entered into a gas storage arrangement in western Victoria. So I think the simple answer is that it’s a portfolio approach.

Senator ROBERTS: Who owns the storage facility in Victoria?

Mr Barnes: It is owned by a company called Lochard Energy.

Senator ROBERTS: Above ground energy?

Mr Barnes: It’s underground storage. The Iona Gas Storage Facility, I think is the name of the facility.

Senator ROBERTS: So it’s rock. It is not lined?

Mr Barnes: No, it’s an old geological storage cavern.

Senator ROBERTS: The Newcastle Herald reported on the Albanese government commitment of $7 million on top of the current $950 million construction cost to allow the plant to run on a blend of hydrogen and gas. How far advanced is the hydrogen component at Kurri?

Mr Barnes: We have now had confirmation of Mitsubishi Heavy Industries that with some notification, we can run at 30 per cent hydrogen.

Senator ROBERTS: How far advanced is the hydrogen component of the Kurri plant?

Mr Barnes: We have proven technically with our equipment provider and with some modification, which we have not yet committed to, that would enable us to run 30 per cent hydrogen.

Senator ROBERTS: Any idea of the completion date?

Mr Barnes: We are not currently executing that project.

Senator ROBERTS: So where is the—you are not executing the project on hydrogen?

Mr Barnes: No. We know it is technically capable.

Senator ROBERTS: That’s the end of it for now.

Mr Barnes: For now, yes.

Senator ROBERTS: Where would the gas come from? Mitsubishi?

Mr Barnes: Mitsubishi are the turbine manufacturer. The question of hydrogen supply we haven’t assessed.

Senator ROBERTS: Any idea at all? Because hydrogen is very expensive to produce, as I understand it.

Mr Barnes: Yes. We haven’t assessed that.

Senator ROBERTS: You haven’t assessed the cost?

Mr Barnes: No.

Senator ROBERTS: Okay. Thank you so much, Chair.

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Snowy 2.0 Will Never Dig Itself Out of a Hole

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In Senate Estimates, Snowy Hydro Chief, Dennis Barnes, revealed that the tunnel boring machine, Florence, has finally started boring again after being bogged for most of the last year. Florence became bogged because the planning for Snowy 2.0 was rushed and designed to meet a political timetable under Prime Minister Turnbull. A critical review of the Turnbull thought bubble would have never authorised work to start. The scheme has now run into problem after problem that should have been foreseen.

The bogging of Florence is just one of many problems that has seen the costs rise from $2 billion when announced, to a staggering $12 billion today. This does not include $5 – $10 billion in poles and wires to get the power out. Those lines will carve a scar through the Kosciuszko National Park, which for some reason is okay with “greenies”.

Hydro needs water. If the scheme has to rely only on water being pumped up to the top dam, the scheme will never generate enough power to pay for itself and will become a white elephant. The Snowy Hydro Authority are relying on a 2002 water agreement that gives them access to water, however there are many agreements, notably the Murray Darling Basin Plan, that now lay claim to that same water. It is criminal that the Authority has not sorted out its water supply at this late stage.

In the second video I asked about local information received that the tunnel drilling machine will encounter natural seams of asbestos, which will result in more cost and delays. I was surprised to have this confirmed, as asbestos has not been mentioned so far. I can only wonder what else they are hiding. This project is 100% funded by the taxpayers who I think are about to lose a very large sum of money. It will be cheaper to stop the project now than throw good money after bad.

Transcript

Senator ROBERTS: Thank you for appearing here today. I said in 2018 that this is a dog: no cost-benefit analysis, no transparent business case and no basis. From your January 2024 project update, it seems that Florence has started moving again, drilling the headrace tunnel at Tantangara. How much distance has been made since the machine became bogged?

Mr Barnes: As of this morning, 241 metres.

Senator ROBERTS: How many weeks is that?

Mr Barnes: That’s about eight weeks.

Senator ROBERTS: Let’s move on to the water. Once completed, how much water will the project require to operate, and what will the losses be to evaporation and seepage?

Mr Barnes: The Tantangara Dam reservoir will contain 350,000 gigawatt hours of water equivalent, which is around 700 gigalitres.

Senator ROBERTS: How many gigalitres?

Mr Barnes: Sorry, 240 gigalitres, two-thirds of that. The losses on moving the water uphill and bringing it downhill is in the order of 20 per cent.

Senator ROBERTS: And evaporation and seepage?

Mr Barnes: There’s no additional evaporation caused by the operation of Snowy 2.0.

Senator ROBERTS: I appreciate you can access Talbingo water, but I’m looking at issues around Tantangara, the top dam. Tantangara Dam has a poor catchment design, as I understand it, holds a nominal 250 gigalitres—you said 240—and is currently at 19 per cent capacity, so roughly 47 gigalitres. You must be watching the water closely, since water is essential to your project. Can you tell me the latest capacity and how much of that is that is dead storage?

Mr Barnes: Tantangara reservoir allows us to store 240 gigalitres. Obviously, before we were to operate Snowy 2.0, we would ensure that it was more full than 19 per cent, but there’s no lost storage in effect.

Senator ROBERTS: What is the effective storage that you’re counting on?

Mr Barnes: It’s 240 gigalitres, which turns into 350 gigawatt hours.

Senator ROBERTS: The long-term weather forecasts say it’ll be fairly wet until it starts becoming dry around 2032, when Snowy 2.0 starts. Tantangara, as I understand it, is used to store and release all of the environmental water going into the Murrumbidgee River. What happens if the 40 gigalitres available after dead water—unless there’s another figure in there; dead water being the amount of water that’s basically inaccessible because it’s below the outlet—are required for environmental flow? Who owns the water that you pump from Talbingo to Tantangara? Can you show me the water use agreement between your project, the federal government and the NSW government, please?

Mr Barnes: We don’t own the water; we operate under the terms of our water licence, which is a public document. Perhaps Mr Whitby can—

Mr Whitby: Senator, I think you’re not taking into account the natural inflows that occur into the upper Murrumbidgee, which, from memory and off the top of my head, is about a similar amount to that 240 gigalitres of storage.

Senator ROBERTS: It’s a fairly small catchment, though, as I understand it.

Mr Whitby: There’s still quite a bit of water that comes in there.

Senator ROBERTS: Quite a bit—how much?

Mr Whitby: I just said, off the top of my head, that it’s around 240 gigalitres of natural inflows.

Senator ROBERTS: So that’s in addition—

Mr Whitby: And, additionally, when Snowy 2.0 is operating, depending on the balance between pumping and generation, you can take water out of Talbingo, the lower storage, which is the whole point of the arrangement.

Senator ROBERTS: My understanding is that the Commonwealth Environmental Water Holder owns and controls every drop in that dam.

Mr Whitby: No.

Senator ROBERTS: The Snowy Water Inquiry Outcomes Implementation Deed, SWIOID—which was some years ago—is currently under review based on the upper Murrumbidgee River running dry recently. Will any outcome from that review lead to your water entitlement being reduced or affected in any way?

Mr Barnes: I think it’s too early to say that; it has some time to go.

Senator ROBERTS: That would be a significant risk to the whole project. Surely you’ve done some assessments of it.

Mr Barnes: I think the review will take into account and balance the needs of our stakeholders, including the national electricity market. There are times, of course, where—if we go back to the 2019 drought and bushfires—the flows through the upper Murrumbidgee were higher than naturally would have occurred, as a result of our operations. So it can have a positive effect.

Senator ROBERTS: According to an ABC article, Snowy Hydro has previously stated that the regulation governing water allocations for the scheme is independent of it and that the government owns the water; is that correct?

Mr Whitby: Yes.

Senator ROBERTS: So there’s no agreement at risk here—or anything subject to an agreement?

Mr Barnes: We operate under our water licence. The implementation deed you referred to from 2002 is the instrument that’s under review.

Senator ROBERTS: From 2002—that’s SWIOID.

Mr Barnes: Yes.

Senator ROBERTS: Three weeks ago, the New South Wales government announced temporary water restrictions on Murrumbidgee water licences, specifically water sources I and II, high-flow river licences. Are you confident you’ll always get your water? Everyone seems to be claiming the water—the farms, the towns, the environment—but who actually gets it in the water brawl?

Mr Barnes: I might leave that one to Mr Whitby, but we don’t consume any water.

Mr Whitby: I’m not sure I really understand the question, Senator. Are you asking if we’re confident that we will get future inflows?

Senator ROBERTS: Yes.

Mr Whitby: That’s a matter for the gods; I’ll leave it there.

Senator ROBERTS: So we’re leaving it to the gods.

Transcript

Senator ROBERTS: Of the now $12 billion projected cost, how much of that is private money?

Mr Barnes: I’m not sure I understand the question, but—

Senator ROBERTS: Is it all taxpayer money?

Mr Barnes: Snowy will finance its debt position, because of course we have debt for the purposes of our operating cash flows, from the bank market or the bond market, and I think we’ve been public that the $6 million increase will require some equity support from the Commonwealth. That level hasn’t been determined yet.

Senator ROBERTS: So its component is privately funded; the debt will be privately funded and then paid back through the revenue?

Mr Barnes: Well, we pay a dividend, obviously, to the Commonwealth and over the last 10 years we’ve paid $2 billion in dividends and $1 billion in taxes, so it is an investment that the Commonwealth get a return on.

Senator ROBERTS: I understand that in answer to Senator Cadel earlier on, you said the net present value is now $3 billion.

Mr Barnes: That’s correct.

Senator ROBERTS: Is that with a $5 billion cost or $12 billion cost?

Mr Barnes: A $12 billion.

Senator ROBERTS: Could you provide on notice the price of the power you sell that you envisage? Your selling price? We’d like to get a feel for the cost.

Mr Barnes: The Snowy 2.0 concept is that its revenue comes from two sources: the provision of insurance to all the participants in the market—so that doesn’t have a power price; it has a fee—and then the difference in the cost of pumping the water up, which will likely occur when there is excess renewables, and the revenue from generating electricity as the water comes down. So there isn’t what you would call a translatable energy price that results.

Senator ROBERTS: On what basis is the project calculated to give a net present value of $3 billion? If we could have the basis for that.

Mr Barnes: We’ve done market modelling on those two revenue streams. Bear in mind that that is an activity we undertake today for our current 5,500 megawatts. We have seen increasingly, with the increase in variable and renewable electricity, that the market value of those two services has gone up.

Senator ROBERTS: Can we get access to your costs, please, so that we can understand how the $3 billion net present value is calculated?

Mr Barnes: We haven’t released the detailed business case on the present value of the project.

Senator ROBERTS: So we can’t get it?

Mr Barnes: I think we have taken on notice in the past that we would consider what business case could be provided. But the business case essence is no different to when it originally went to FID.

Senator ROBERTS: A lot of the key assumptions back then were redacted.

Mr Barnes: A business case was released a number of years ago, and all of the same dynamics apply, except that the market for the services we provide has increased.

Senator ROBERTS: Can we get a feel for the revenue from the guarantee—the insurance if you like—as well as the profit on the price difference?

Mr Barnes: I think I’ve said publicly before that—and one can calculate this—the revenue from Snowy 2.0 is in the order of a billion dollars a year. One-third is from capacity sales, and one-third is from a shift in electricity from low-price times to higher price times.

Senator ROBERTS: Minister, it seems to me the taxpayer is taking a big risk here so far with what we’ve seen of the performance of Snowy 2.0. Why can’t the taxpayers see what they’re paying for and the risk they’re being exposed to?

Senator McAllister: I think the history of this project is well understood. We’ve asked Snowy management to take a more active role in assessing and responding to project risk, and we’ve talked already about the reset. I think, as part of the reset, Snowy management—Mr Barnes and his team—released quite an amount of information and the results of their analysis of their position, and they’ve made clear their assessment about the value that sits within the project. If there’s any further information we can provide, we’re happy to consider it.

Senator ROBERTS: Could you take that on notice, please. What are your annual maintenance costs in your net present value calculations?

Mr Barnes: I don’t have the number off the top of my head, but it’s relatively small.

Senator ROBERTS: Could you take that on notice.

Mr Barnes: Yes.

Senator ROBERTS: This is my final question. We’ve heard reports from someone who’s local, so we’re not saying it’s definite—I haven’t got a publication; it’s just reports from a local. Have you encountered natural asbestos as part of land clearing, drilling or construction of Snowy 2.0?

Mr Barnes: I’m not sure we have to date, but we do expect to—

Mr Whitby: I would phrase it as there is a risk that we may encounter naturally occurring asbestos.

Senator ROBERTS: What sort of risk is that? Is it from geology projecting forward? What’s the basis of it?

Mr Whitby: From projection, geological models based on the geological surveying that we’ve done.

Senator ROBERTS: And drilling as a part of that?

Mr Whitby: Correct.

Senator ROBERTS: Where is it, what are the costs, and what delays will this cause?

Mr Barnes: We don’t know exactly where it may occur, but the design of Florence is such that, were it to be encountered, Florence would convert into its closed or slurry mode and be able to handle the excavation. It’s a risk that’s already been planned for.

Senator ROBERTS: So it’s incorporated in the cost?

Mr Barnes: Yes.

Senator ROBERTS: Thank you, Chair, and thank you.

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Snowy Hydro 2.0 – The whitest white elephant in Australia

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Despite promises of being one of the world’s largest batteries for only $2 billion dollars, Snowy 2.0 is shaping up to cost over $10 billion and only supply a fraction of promised capacity.

Transcript

As a servant to the people of Queensland and Australia, I speak about the Auditor-General’s performance audit titled, No. 33—Performance audit—Snowy 2.0 governance of early implementation: Snowy Hydro Limited.

Some background for those who may be new to this project: Snowy 2.0 is an extension of the Snowy Hydro project, hence the name. In 2017, Prime Minister Turnbull announced the cost of Snowy 2.0 as $2 billion. This report states that the cost is now $5.1 billion plus billions of other costs, totalling well over $10 billion. The completion date is out to 2025, so we can expect further cost blowouts. The project involves using electricity from unreliable sources like wind and solar to pump water from a lower reservoir, Talbingo Dam, through underground pipes to an upper reservoir, Tantangara Dam. Water is then sent back down to Talbingo Dam, generating electricity on the way. Snowy 2.0 is referred to as a ‘big battery’ because water is stored in the top reservoir until it is needed. The same turbine is either pumping water uphill or generating electricity from the water coming down. The total pipe length is 27 kilometres. Generally, water is pumped up during the day—provided the sun is shining and the wind is blowing. The water is then released down the pipe to generate electricity in the evening peak, when it’s most needed. As the sun does not shine and wind goes quiet at night, pumping water back up the hill overnight, ready for the morning peak, will need coal power. The upper reservoir may hold multiple days worth of water and, at some point, the dam must be refilled, especially as Tantangara Dam is currently only 17 per cent full.

Pumped hydro only works when the dam has water in it. For every megawatt of power generated by water coming down the hill, the turbine needs 1.3 megawatts of power to get the water back up, because of losses. In total, 30 per cent more coal is used in Snowy 2.0. Pumped hydro, put simply, entails generating electricity 2.3 times to be used by consumers once. This is not cheap electricity; it’s actually really expensive electricity. The solar and wind fairy tale needs pumped hydro as a way of storing unreliable wind and power generation, which occurs mostly during the day, and moving that capacity to the evening peek, when unreliable solar and wind can’t provide baseload power.

Maximum generation for Snowy 2.0 is an impressive 2,000 megawatts, but here’s the catch: annual generation is listed in this report as 350,000 megawatt hours. Running at full capacity, Snowy 2.0 will generate electricity for only 175 hours a year. To put that into perspective, my home state of Queensland used 68 million megawatt hours last year. Snowy Hydro will contribute the equivalent of half of one per cent of Queensland’s power each year, one-tenth of one per cent of Australia’s annual generation, at a cost of $5 billion and rising—and that doesn’t include all the costs. This madness will send us broke. There’s a far better way: a 2,000-megawatt coal-fired power station is able to run at 2,000 megawatts 98 per cent of the time, 24/7. Liddell in the Hunter Valley generated nine million megawatts last year.

For less than the cost of this green fairy tale called Snowy 2.0, a coal plant can produce at least 25 times the amount of electricity. That’s why Germany’s Greens coalition government is turning Germany’s coal-fired power stations back on. Shutting ours down when we see what’s happening in the rest of the world is criminal irresponsibility. Prime Minister Albanese is promising reduced electricity prices while at the same time building horribly expensive power generation. The Prime Minister’s agenda will fail, and he will take Australia down with him. Instead, One Nation will build baseload power stations, reduce the cost of electricity, restore grid reliability, restore grid stability, restore Australian manufacturing and restore the income of working Australians.

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