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Australian utility's gas, hydropower project costs rise

  • Mercados: Electricity, Natural gas
  • 31/08/23

Australian state-owned utility Snowy Hydro has confirmed higher costs to build its pumped hydroelectricity scheme Snowy 2.0 and its open-cycle gas-fired Kurri Kurri power plant.

Costs to build the delayed Snowy 2.0 project has doubled to A$12bn ($7.8bn) from a previous A$5.9bn cost estimate, which was also raised from an original estimate of A$4bn. The project will increase generation from the 1950s-era Snowy Mountains hydro scheme via a system of tunnels to replenish water in its upper dams when the cost of power is low.

Expenditure on the scheme reached A$4.3bn as of 30 June, Snowy Hydro said. It is on track to generate first power in July-December 2027 and achieve commercial operation of all units by December 2028. Snowy 2.0 was originally planned for completion in 2025. The utility said the project's output capacity would be boosted by 200MW or 10pc, bringing total capacity to 2,200MW.

Snowy Hydro said the fixed-price engineering, procurement, and construction contract was "executed in a relatively benign and supportive environment", but was no longer fit for purpose because of soaring construction and labour costs.

Costs associated with Snowy Hydro's 750MW Kurri Kurri gas-fired plant in New South Wales (NSW) have also increased from the previous A$600mn to a total target cost of A$950mn now. But the project remains economic and on track for completion by December 2024, the firm said.

Canberra originally wanted Kurri Kurri operational before the closure of the 1,680MW Liddell black coal-fired power plant in NSW, which occurred in April.

A slowing pipeline of renewable generation projects has been highlighted by recent reports from the nation's government agencies. The Australian Energy Market Operator has warned that faltering investment in large-scale renewable projects must be addressed if Australia is to reach a target of 82pc renewable power by 2030.

Delta Electricity, operator of the 1,320MW Vales Point coal-fired generator in NSW, said in July it can keep the power station open four years longer than previously planned because of faltering renewable investment.

Australia's Clean Energy Council said only four large-scale generation projects with a total capacity of 348MW reached final investment decisions during the April-June quarter, with no new commitments in the previous quarter .


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