Snowy Mountains adds long planned element 02 May 2019

Construction of another element of the Snowy Mountains water management and hydro scheme on the boarders of New South Wales and Victoria in southeastern Australia is to go into construction following confirmed award of the civil and mechanical installation contract in early April to the Future Generation group led by Salini Impregilo of Italy. Identified as part of the original scheme in the mid-1900s and studied again in the 1980s, the economics of construction versus the value of the power to be generated, together with the long-term green energy objectives in Australia, now supports the feasibility of the Snowy 2.0 project as a pump storage installation to link the existing upper Tantangara Reservoir and lower Talbingo Reservoir to generate an added 2GW capacity in an underground generating and pumping powerhouse.

Fig 1. Elements of the Snowy Mountain Scheme and location of the new Snowy 2.0 project

Following a Aust$29 million two-year feasibility study concluded by SMEC, the Snowy Mountain Engineering Corporation, the Aust$5 billion+ investment for construction of Snowy 2.0 was approved in December 2018 to increase the hydro capacity of the overall scheme installation from 4GW to 6GW (Figs 1 and 2). An extensive 18-month competitive tender process of two shortlisted proposals for excavation of up to 27km of headrace and tailrace tunnelling and the powerhouse caverns located at up to 800m below the surface, resulted in announcement in February 2018 of the Future Generation JV as the preferred bidder for Snowy 2.0.

Salini Impregilo signed the Aust$5.1 billion (€3.228 billion) contract for the civil works and electromechanical component of the project in its capacity as the combined 65% leader of the JV with its USA subsidiary Lane Construction and with JV Australian partner Clough with a 35% stake. The contract was signed in early April with Snowy Hydro, the owner of the Snowy Mountains scheme, which is governed by an independent Board of Directors and has the Australian Federal Government as its sole shareholder.

Under the terms of the six-year contract, the Future Generation JV will complete the civil works and install the power generation and pumping components which are to be supplied under a procurement contract with Voith Hydro. The underground powerhouse will contain six reversible Francis-type pump turbines, each with a rated output of 333MW, three of which are variable speed. Voith will also supply the six motor generators and the auxiliary and complete power plant automation systems.

Fig 2. Snowy 2.0 will connect the Talbingo and Tantangara Reservoirs with about 27km of tunnelling and a 2 GW pumped storage power station in between

Also confirmed in early 2019 is a contract with Leed Engineering of Adelaide, South Australia, for the exploratory and pre-construction works. These include an exploratory tunnel of about 3km long to the top of the cavern complex to investigate the condition of the prevailing geology and to bore exploratory holes to confirm the best location and orientation of the powerhouse. The tunnel is be constructed using drill+blast and TBM methods and will become the main construction and permanent access to the power station. Preparatory works include construction of the work site and access portal; setup of the work site offices and camp; and upgrading of local roads and tracks to provide all-weather access to the site including for heavy construction vehicles. Pre-construction activities are underway and, with the exploratory works, are expected within 18 to 34 months.

Path to approval

Proposals to progress with the Snowy 2.0 project came in March 2017 as part of efforts by the Government of then Prime Minister Malcolm Turnbull who announced efforts to move Australia towards increasing its renewable energy sources. This resulted in commissioning of the $29 million feasibility study by SMEC by Snowy Hydro.

In March 2018 the Federal Government became the 100% shareholder of Snowy Hydro by added to its previously held 13% of the company and buying out the 58% share held by the State Government of NSW and the 29% share of Victoria State for a total cost of more than $6 billion.

According to Snowy Hydro Chief Executive Paul Broad it was agreements in November 2018 of favourable long term supply agreements with solar and wind generators for supply of off-peak energy to pump water back to the upper reservoir and provide an estimated 175 hours for peak demand storage that contributed to the favourable economics of advancing Snowy 2.0, improving anticipated returns from the project to about 9%.

Approval to progress with the project in February 2019 gave the green light to progress to the early works stage and committed a Federal Government equity investment of up to $1.38 billion over a six-year period, with the balance to be financed through financial agreements secured by Snowy Hydro. Confirmation to progress with the main construction works are subject to approval of the environmental impact statement that Snowy Hydro is expected to submit to the NSW Government in late 2019. With approval, start of the main contract works is expected in 2020.

Snowy 2.0 will be the largest hydro power station in Australia and will triple the pumping capabilities of the overall scheme to underpin Australia’s renewable energy future. Snowy Hydro, as one of the country largest energy companies in Australia, produces some 33.9% of the nation’s current renewable energy power.

In speaking of the contract award to Future Generation, Snowy Hydro Chief Executive Paul Broad said that the agreements confirmed the capital cost (excluding transmission), at between $3.8 billion and $4.5 billion in 2017 dollars and rising to more than $5 billion with inflation adjustments to end of the construction period. An additional $2 billion is required to upgrade the feed transmission lines to the cities of Sydney and Melbourne.

First power from the project is expected to be on line by about 2024.

To date, 17% of electricity energy in Australia is generated by clean sources with Snowy Hydro contributing more than 30% of that

Constructed between 1949 and 1974, the existing Snowy Mountains Scheme is the largest public works engineering scheme ever undertaken in Australia and comprises sixteen major dams, nine power and a pumping station and up of 145km of tunnels and 80km of pipelines and aqueducts (Fig 1). Spanning an area of 5,124km2, only a fraction of the infrastructure is visible on the surface. The scheme remains Australia’s largest producer of renewable energy, and manages irrigation water flows via the western Murray and Murrumbidgee Rivers to a vast agricultural area of the nation.

In a statement following confirmation of the multi-billion contract, Pietro Salini, Chief Executive Officer of Salini Impregilo said: “With this major engagement, we are bringing know-how that we have acquired from involvement in hundreds of projects throughout the world. The contract expands our activities in Australia where we completed the skytrain bridge and viaduct for Metro Northwest project in Sydney last year, and progress of our Forrestfield-Airport metro rail link contract in Perth. It also confirms our strategy to grow in the country and supports the investments that we have been making in recent years at the university level for the development of young talent in the construction and underground engineering industry.” Salini Impregilo was also recently awarded construction of the diversion tunnels to prepare for construction of the Polihali Dam as the first excavation contract on the start of the Lesotho Highlands Water Project Phase II between Lesotho and South Africa that also includes excavation of a 38km long transfer tunnel to Katse Reservoir.

In his statement, Uwe Wehnhardt, President and Chief Executive Officer of Voith Hydro said: “Pumped storage systems are currently the most economically viable and technically proven form of storing electrical energy on a large scale. Voith is proud to be a part of this important hydropower project and to continue to contribute to Australia’s renewable energy development.”