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Snowy Hydro 2.0 found to be feasible despite costing twice as much

Today, Snowy Hydro released their feasibility study into the expansion of the pumped hydro-electric storage. The study outlined that the potential upgrade will increase capacity by up to 2,000 MW at full capacity and will provide approximately 350,000 MWh hours of energy storage.

It has been agreed by Snowy’s board of directors to progress the project from feasibility stage towards final investment decision. According to Snowy Hydro, the project will be internally funded and meets financial hurdle rates under different scenario’s. The cost of the project is estimated to be $3.8-$4.8 billion.  This does not include the required transmission network upgrades  required to deliver the power from the upgraded facility. This could be a key assumption of the report and could potentially undermine the potential value of the project.

Details of the modelling are obviously tightly kept, however something that would be of significant interest is how the upgrades will stand up during prolonged periods of drought.

Final investment decision is due in 2018.

If you would like to know more about the potential impacts this may have on the future price of electricity, or details regarding the project please speak with your Edge Portfolio Manager directly or contact Edge on (07) 3232 1115 or 1800 334 336.