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    Snowy boosts green image with wind deal


    June 20, 2022 - PERRY WILLIAMS

     

      Snowy Hydro has signed a 15-year deal to buy power from a major wind farm in NSW, the latest move by the operator to offer big buyers clean renewables supply backed up by its pumped hydro capacity.

      The contract will see Snowy purchase 200 megawatts, or nearly half of the supply, from CWP Renewables’ Uungula wind farm in the central west region of NSW once the project sparks up its first generation in 2026. The overall 414MW of output will provide clean power for 200,000 homes.

      It means Snowy now has a dozen such renewable energy offtake agreements on its books as part of a broader $2bn plan to back up ­intermittent renewable energy supply with the company’s existing pumped hydro generation to push down ­prices and introduce new com­petition to the market.

      “Renewables are the future and by combining our contracted wind and solar projects with our on-demand hydro assets we can provide ‘firm’, secure, low-­emissions energy to the market, while keeping the lights on,” Snowy chief executive Paul Broad said.

      Snowy – which has a million ­retail power customers through its Red and Lumo energy brands – has previously teamed up with CWP on its Bango wind farm, north of Yass in NSW, and has committed to buying over 1700MW of renewable energy from a string of solar and wind developers across NSW, Victoria and South Australia.

      The government-owned company, which is battling delays at its Snowy 2.0 hydro expansion project, first approached wind and solar developers in 2018 as part of a strategy to secure long-term, lower pricing for its customers and reduce volatility from the power that it buys from the wholesale market.

      CWP, put up for sale by its Swiss private equity fund manager Partners Group, has more than 1 gigawatt of wind and solar farms running or close to start-up and a 5GW pipeline of projects in the works. A raft of high-profile names including Canada’s CDPQ, Shell and APA have been linked with the potential sale of CWP, in a process being run through Macquarie Capital. The Australian understands non-binding, indicative bids are due at the end of July, with binding offers expected by October.

      Snowy has suffered a potential 18-month delay on its flagship Snowy 2.0 project, with the expansion scheme now not expected online until the end of 2026.

      The holdup presents a fresh headache for the energy market given extra power from the expansion is seen as a critical bridge as the pace of coal generation closures accelerates and more back-up electricity is needed to support growing renewables.

      Snowy is also battling delays ensuring new transmission links have been built to carry power from the expansion which will boost its existing 4100MW capacity by an extra 50 per cent or 2000MW. That includes TransGrid’s proposed Hume Link to southern NSW, set to open in 2026, and the southern transmission link to Melbourne called VNI West later this decade.

      Snowy in February warned a failure to push ahead with crucial investment in new electricity transmission could trigger higher power prices, blackouts and dangerous system instability.

      The original feasibility study for Snowy estimated a budget ranging between $3.8bn and $4.5bn in real dollars which increased to $5.1bn, including fixed cost escalation over the construction period. The budget includes a $400m contingency factor but the company put the overall cost schedule under review in mid-April, with Mr Broad saying it was carrying out an assessment of Covid-19 impacts and the contractor’s mitigation. With several big coal plants exiting earlier than planned, including Origin’s Eraring station potentially closing mid-2025, the delay could spark problems for broader system security.

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