Progress of Snowy 2.0

Active construction site of Snowy 2.0 hydroelectric project with cranes and temporary buildings on a rugged landscape.

Since the beginning of construction, Snowy 2.0, a pumped storage power station, has faced a variety of challenges and issues, including the tunnel boring machine getting stuck late 2022 and the project being well over budget, more than double the previous estimate, and six times the ballpark figure given by Malcolm Turnbull.

Despite these setbacks, rock conditions are currently good, and in a year’s time, the project is forecasted to have created an underground cavern that should be big enough to accommodate a 22-story building. This will house the $12b 2.2GW system with a storage capacity of 350,000MWh (159 hours at full power), which is forecasted to reach full commercial operation by December 2028.

Snowy Hydro CEO Dennis Barnes stated they are approximately 51% of the way to completing the project, but there is still a lot to de-risk going forward.

The tunnel boring machine Florence, which got stuck in September 2022 due to unexpected soft ground, was stuck only 140 metres into its 16-kilometre journey. Florence has begun to move again in December 2023, but moving at a rate of 6 metres per day. In order to stay on target, Florence will need to pick up the pace to 12 to 15 metres a day.

According to Barnes, Snowy is considering a fourth boring machine to ensure the project will keep on the revised target, with the decision being made in the following months.

Projects such as Snowy 2.0 providing long-term storage are crucial for the energy transition in the NEM, being able to provide firming capacity during solar and wind droughts, which will inevitably occur. This will allow for the retirement of coal units, as well as allow for a total of 6.6GW of new renewables into the system.

Even with the need for such projects, the project has faced backlash due to the cost blowing out considerably higher than initial estimates, particularly when the additional $8.5 billion of connecting transmission to the north and south is included.

Despite the range of challenges faced by Snowy 2.0, including budget blowouts, difficulties with the tunnel boring machine, and delays, the project is showing progress and plays a key role in achieving Australia’s renewable energy targets.

 

Potential for Below Baseline REGOs

Two silhouetted figures stand on a platform at sea, observing a vast offshore wind farm against a dramatic sunset sky.

LGCs are now in an interesting position. With the REGO scheme all but fully legislated to start in 2025, there may be opportunity to meet voluntary requirements from this secondary market before it becomes the likely primary market at the end of 2030 until 2050.

The REGO scheme looks likely to exist in parallel to the LGC scheme until the expiry of the RET, with generators able to decide which products they would like to produce in any given period.

However, the REGO scheme will open previously un-tapped generation, such as below baseline generation, generation from outside of the Australian economic waters area and exported generation i.e. Sun Cable, which the LGC cannot. Further (although unlikely before 2030), STCs can be pooled to create 1 MWh, i.e. 1 REGO certificate at the point the 1MWh limit is reached.

This market is currently untapped, but with a REGO holding the same credentials as an LGC, the voluntary surrender optionality (RET Liability must still be met with LGCs until 2030) can be achieved through the REGO scheme.

With voluntary surrenders increasing, the CER estimated in 2022 a total of 7.4million LGCs were surrendered voluntarily. This increased the demand for LGCs by 1.6million in comparison to 2021 and created a demand 23% above the legislated requirements for LGCs (33m).

Prior to a REGO scheme, the increasing demand for these LGCs has come from growing corporate targets either directly into the LGC market or through its secondary market, such as GreenPower schemes.

Without increasing the availability of alternative generation sources, this growth could lead to a tightening of the supply-demand balance of the LGC and an increase in price. As such the introduction of a REGO from 2025 could be the pressure release valve the industry requires.

The growing non-RET requirements are significant, and therefore, the introduction of secondary sources of power through the REGO scheme is the only way the market will be able to meet the increasing demand.

The ACCC investigation into Momentum in 2016, where Momentum was handed a $54,000 fine for falsely advertising their green credentials, as they are backed by Hydro Tas whose generation was below baseline, has brought to the fore the requirement for accreditation of these below baseline assets (outside of the i-REC scheme).

Below baseline is renewable generation assets created before 1997 – mainly hydro assets. The baseline is set on production between 1994 – 1996, and therefore, generators coming on from 1997 have a baseline of zero and can produce LGCs, unlike those online prior to 1997. Indications are these facilities generate 12-13TWh of electricity each, that is, 12-13 million REGOs, which could come into the Australian voluntary market (pre-2030 RET end). However, the below baseline generation is eligible for an i-REC certification and many assets pursued this option prior to the REGO /GO scheme announcements. As such, this 12-13 million may be as low as 2 million in the initial years, given existing PPAs and voluntary i-REC surrender deals in place.

It is worth noting, if Hydro Tas had created the REGO and these were surrendered against the Momentum portfolio, the renewable claim would have been upheld, and the REGO would have never hit the market. This example shows that even if produced, companies may utilise the additional certification without giving others the opportunity to trade them in the open market.

A concern does sit around the inclusion of small-scale renewable REGOs, although unlikely to be in large quantities prior to 2030, the concern holds that the measurement of the “hour” the REGO is produced, when the cumulative units have reached 1MWh of generation, is currently untested and there are a significantly larger number of these units than there are utility scale solar. The cost and oversight required could add cost to the certificate, which we currently have no view of as to the uptake or requirements.

Transmission Requires Community Engagement Realisation

Back view of two children and an adult walking towards wind turbines, the adult holding a colourful pinwheel up in the air

With the government ploughing ahead with the re-wiring the nation rhetoric and discussions about $10,000/km costs for land the attention of the AEMC and others have naturally been drawn to the requirement for community engagement.

Many panels and speakers at this years’ All Energy conference in Victoria honed in on the requirements for the local communities to be brought into the fold regarding Renewable Energy Zones, Transmission and the benefit this could bring to those communities.

The AEMC have taken this a step further and on Thursday released the final requirements which are required for any transmission projects to get through the regulatory investment test (RIT-T). They are expecting for this engagement to be across all affected parties from councils to local landowners and will ensure they not only have clear information about the proposals but they are aware of the rights they hold.

Taking directly from the AEMC announcement the main changes being made include:

  • Stakeholders are to receive information that is clear, accessible, accurate, relevant and timely and explains the rationale for the proposed project.
  • Engagement consultation materials, methods of communication and participatory processes must be tailored to the needs of different stakeholders.
  • The stakeholders’ role in the engagement process must be clearly explained to them, including how their input will be taken into account.
  • Stakeholders are provided with a range of opportunities to be regularly involved throughout the planning of ‘actionable’ or ‘future’ Integrated System Plan (ISP) projects and Renewable Energy Zones (REZs).

This is timely given the announcement from Chris Bowen who was speaking at the Future Energy conference in Adelaide this week who amongst his optimistic speech stated that “a properly constructed renewable grid is a reliable grid… is one that we can count on in difficult times,” and that access to transmission or delays in building new infrastructure would be the main contributor to Australia not meeting its targets.

These targets are now set to 82% of Australia’s energy coming from renewable sources by the end of the decade, and GHG emissions cut by 45% (in comparison to 2005 levels) by the same time.

However, with the focus of the government squaring in on transmission as the key messaging to Australia missing its targets and not the lack of cohesive renewable energy strategy for the past 10 years or the governments approvals of new gas fields, you do wonder if that is part of the reason our Minister for Climate Change and Energy is ducking the hard questions at this years COP28 in Dubai which starts at the end of the month.

The announcement that he is dispatching his Assistant Minister, Jenny McAllister has not gone unnoticed, especially by the pacific islands our Prime Minister is trying to woo this week. With those nations key to Australia being announced as the COP31 hosts, Turkey is stating they would also be interested, they intend to firmly hold Australia to its climate promises and pointing the finger will not wash with their nations at the forefront of recent climate disasters.

 

Electricity Grid Faces Challenges Amid El Niño’s Return, Warns AEMO

Australia’s electricity grid is bracing for potential disruptions this summer, particularly in Victoria and South Australia. The Australian Energy Market Operator (AEMO) has expressed concerns about the imminent El Niño, which is anticipated to bring about a season of extreme heat and wind-less days.

This latest warning from AEMO (2023 ESOO) presents a very concerning picture. The slow pace of transitioning from old coal plants to cleaner energy sources, coupled with potential coal and gas shortages, has heightened the risk of blackouts. AEMO’s annual 10-year outlook emphasizes the urgency of investments. With nearly two-thirds of Australia’s coal power fleet expected to shut down by 2033, the need for swift action to ensure uninterrupted power supply is paramount.

The challenges of transitioning to a greener economy are becoming more evident. The scenario in NSW, following the proposed 2025 closure of the massive Eraring coal generator, is particularly urgent. AEMO strongly recommends postponing such retirements to avoid blackouts. Contrasting their optimistic report from February, the upcoming summer may see Victoria and South Australia facing with power shortages. These shortages can be attributed to a mix of factors, including periods of low wind, recurring generator breakdowns, and the gas plant shutdown.

The latest AEMO report indicates that roughly 3.4GW of new generation and storage capacity is projected by this summer. Furthermore, initiatives like Snowy 2.0 in NSW and the Borumba pumped hydro project in Queensland are aimed to bolster capacity by 2032-33. However, there are concerns as projects like Snowy 2.0 confront delays and rising costs.

With the re-emergence of the El Niño pattern, the electricity grid is anticipated to be under significant stress, especially following three comparatively milder summers due to La Niña. The growing popularity of electric vehicles and electric heating, notably in states like Victoria, will add to the strain on the grid.

Sarah McNamara, the CEO of the Australian Energy Council, perceives this both as a challenge and an opportunity. She is optimistic that the market can overcome these obstacles with the appropriate price signals to stimulate investment.

In conclusion, while the journey to a low-emission economy might be lined with challenges, with the right strategies and investment, Australia can ensure a reliable and sustainable power supply for its citizens.

Coal state leading the way to renewables

Last week in Queensland the weather was perfect. It was perfect for those at the beach during school holidays but also perfect for renewable energy.

As everyone in the NEM knows, Queensland is better known for its dominant coal generation, at times pumping out 80% of Queensland’s power supply. With the clear skies and just enough wind, Queensland became the renewable state.

Last week, Queensland’s demand was supplied by over 66% renewable energy. Solar was the largest contributor of renewable energy with wind coming in second.

Previously we have seen the state powered by 50% renewables but the 66% hurdle is a positive message for end users impacted by the reliability and behaviour of the thermal generators.

The Palaszczuk government announced their 10-year-energy plan which involved introducing two new pumped hydro mega-projects in regional Queensland and a green conversion of its coal-fired power generators. The Palaszczuk government also has recently announced upping the target of 50% renewable energy by 2030 to 70% by 2032.

Despite this increase in target, until recent years coal has remained dominant in Queensland. The government has all but ruled out the early retirement of any of the state-owned coal-fired power stations, following pressure from unions. Some could say the slow uptake in renewables is due to supply chain issues, registration, connection and construction delays while other may say it results from the government owning a significant portion of the existing thermal and non-thermal generation that is reaping high returns due to the spot and forward energy prices.

AEMO’s recent Integrated System Plan (ISP) shows the NEM will contain over 80% capacity coming from renewables by 2030. While the renewable industry in Queensland has been slow to grow recently more federal funding is being used to rewire the nation by connecting renewable energy zones (REZ) to end users. With the rewiring in place developers are less restricted in building and financing renewable projects and producing renewable energy.

Industry is also looking for renewable energy to meet their sustainability targets which leads to a market for new renewable projects. AEMO indicated there are thousands of MWs of renewable projects waiting to be built.

If Queensland followed the latest ISP, the state would require an additional 30GW of energy from renewable sources and the storage required to make it useful for end users when the sun does not shine, or the wind does not blow.

Today’s announcement by the premier outlined the $62B plan for Queensland energy and jobs. The plan includes:

  • 70% of Queensland’s energy supply from renewables by 2032
  • 80% of Queensland’s energy supply from renewables by 2035
  • Two new pumped hydros at Pioneer/Burdekin and Borumba Dam by 2035
  • A new Queensland SuperGrid connecting solar, wind, battery and hydrogen generators across the State
  • Unlocking 22GW of new renewable capacity – giving Queensland 8 times the current level of renewables
  • Publicly owned coal fired-power stations to convert to clean energy hubs to transition to, for example, hydrogen power, with jobs guarantees for workers
  • Queensland’s publicly-owned coal-fired power stations to stop reliance on burning coal by 2035
  • 100,000 new jobs by 2040, most in regional Queensland
  • 11.5GW of rooftop solar and 6GW of embedded batteries
  • 95% of investment in regional Queensland
  • Building Queensland’s first hydrogen ready gas turbine

With this announcement by the Premier, Edge look forward to more renewable generation entering the market resulting in savings for end users and the planet.

If procuring renewable energy is one of your company goals, Edge2020 can help you build a PPA to support your sustainability strategies. Contact us on 1800 334 336 or info@edge2020.com.au

 

Today is the day we are officially in debt to our ecosystem

Earth overshoot day

Today is earth overshoot day.

Being green isn’t just about renewable energy, cycling to work or using re-usable bags when you do your shopping. It is about being in a state of equilibrium with the planet that we inhabit and not emitting more carbon  dioxide than we can absorb.

When we are not in equilibrium, we “overshoot” our allowance and as with all debt we are borrowing from the future rather than living within our means.

Unfortunately, yesterday we officially spent our allowance and as of today (Friday 29th July 2022) we are in debt to our ecological budget for the rest of the year.

This has been gradually getting earlier and earlier and as you can see the National Footprint and Biocapacity accounts have shown we have been over budget for half a century.

Interestingly not every country overshoots at the same rate. If the planet lived like Australians overshoot day would fall on the 23rd March, but if we lived like Jamaica we would basically be in balance and not overshoot until December 20th. So surely if many countries can live in balance so can we?

The understanding of Climate Change and acknowledgement of action is now widely recognised, but I feel the sheer scale of the effect of inaction is yet to be fully understood.

Energy is one major way we can help ourselves reach the goal of balance in our biosphere.

Reducing the carbon output of our energy by 50% will move the overshoot day by over 3 months and by utilising existing energy efficient technologies in energy, buildings and industrial processes we can push this another 21 days.

The decarbonisation of our energy economy is not only becoming more crucial from a resilience to international cost pressure perspective, but is crucial to assisting us push the overshoot  date out,  to balance the budget of our biocapacity by not  ‘overspending’.

Edge2020 provides energy management and advisory services to buyers and sellers of physical and financial energy products. We specialise in electricity, gas, renewable, environmental, and carbon products. Edge2020 can help ensure you achieve your business sustainability goals by supporting you with strategies that focus on minimising consumption and responsible purchasing of renewable energy. Reach out to our passionate team for support to improve your sustainability outcomes. email: info@edge2020.com.au