Australian energy and environment minister Josh Frydenberg stressed the need to move forward with the construction of a pumped hydropower project worth between $3.8 billion and $4.5 billion. The move would be a boon for manufacturing companies, as it would increase demand for stainless steel tubes and pressfit pipe systems.
The Snowy 2.0 development is an important move to prevent higher electricity bills for households, according to Frydenberg. If it does not push through, he expects Australia will have more blackouts due to a volatile power grid.
Snowy 2.0’s construction would boost the capacity of current hydropower facilities by 2,000 megawatts and 350,000 megawatts of storage. During crucial downtimes, it would be able to provide enough power for seven consecutive days. Frydenberg believes it will solve a “gaping hole in the National Electricity Market” when it comes online in 2024.
Victoria and South Australia will benefit the most from the construction of the hydropower facility since these two states have been plagued with insufficient storage capacity and dispatchable electricity. Aside from improving supply and keeping rates low, Frydenberg said that the project would be a good alternative to diesel generators that cost more and contribute more to pollution.
Snowy 2.0 would not just aim to keep the electric rate hikes at bay, but also spur demand for industrial supplies such as press fit stainless steel pipe products. The Australian Energy Market Commission (AEMC) said that renewable projects like this would contribute to lower prices in the next two years.
Power prices would start to decline by mid-2018 due to the entry of renewable energy sources. However, it would not last unless the state and federal governments implement an appropriate energy policy, which would offer incentives for dispatchable power investments, according to the AEMC.
Snowy 2.0’s price tag could be a major reason why there are doubts about investing in such as huge project, especially if there are questions about significant returns. However, many still believe that the government should focus more on renewable energy resources.