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Snowy Hydro expansion could cost double initial $2 billion estimate

Snowy Hydro expansion could cost double initial $2 billion estimate

The bill for the Snowy Hydro expansion could be twice the initial estimate, while the project's delivery time frame has been increased by two years.

Executives from Snowy Hydro Limited have estimated that an essential upgrade of power transmission lines from the mountains into Sydney and Melbourne will cost up to $2 billion, effectively doubling the cost of the total project.

When Prime Minister Malcolm Turnbull announced the "supercharged" pumped-hydro scheme in March, he estimated it would take four years to dig 27 kilometres of tunnels and sink a turbine a kilometre below ground to make the project ready to plug in to the National Energy Market.

But Snowy Hydro now believes that would take up to six years because of "challenging" geology.

Snowy Hydro chief executive Paul Broad told a Senate estimates hearing on Tuesday that the four-year aim was possible only if "everything went your way", with five to six years being a more likely time frame for completion.

As Snowy Hydro starts a $29 million feasibility study, TransGrid has been assessing the scale of the upgrade needed to transmit another 2000 megawatts of electricity to the major centres in Victoria and NSW.

Snowy Hydro chief operations officer Roger Whitby told senators that was likely to cost more than $1 billion and up to $2 billion, "based on early works that TransGrid have started to do".

Fairfax Media has contacted TransGrid for comment.

The "deep transmission" upgrade is necessary because of the large distances between the chosen dams and the large population centres.

Labor senator Kim Carr asked Snowy Hydro "how feasible" the $2 billion estimate was for the tunnelling and civil works needed.

"We believe that is a reasonable estimate at the moment," Mr Broad said.

The pumped-hydro scheme was first proposed in 1966 and reports into its potential were completed in 1981 and 1991.

The hearing heard earlier on Tuesday that Mr Turnbull's announcement was made less than a fortnight after the first discussions between his office and Snowy Hydro.

The Australian Renewable Energy Agency, which will be involved in funding, had its first "substantive discussions" with Snowy Hydro on February 24.

Pumped hydro acts as a "battery" for the electricity network by moving water back up to a higher dam when electricity prices are cheap and using the stored energy to produce power when demand is at a peak.

Cooma-based Snowy Mountains Engineering Corporation Australia has been selected to conduct the feasibility study.

Mr Broad said work could begin by the end of 2018.

Later, the Clean Energy Regulator said the pace of renewable energy take-up, particularly large-scale solar, had accelerated.

Last year, the regulator estimated that another 3000 megawatts of generation would need to be committed by the end of 2017 and a further 1000 megawatts in 2018.

Acting chairwoman Jody Swirepik said all of that could be announced by the end of this year at the current pace of investment, placing Australia on track to meet the Renewable Energy Target.

Sydney Morning Herald

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