MELBOURNE (Reuters) - Australia’s conservative government approved A$1.38 billion ($989.46 million) for a huge expansion of the state-owned power generator Snowy Hydro to back up wind and solar power, ahead of an election in which climate and energy policy will be hot-button issues.
The A$4 billion expansion is needed to shore up Australia’s power supply as aging coal-fired plants shut over the next few decades. The plan was pushed by former Prime Minister Malcolm Turnbull, who touted it as Australia’s biggest renewable energy project since Snowy Hydro was first built.
The announcement by Prime Minister Scott Morrison had been widely expected, after the Snowy Hydro board approved the project in December.
The government, split over energy policy as its right wing backs coal, is eager to burnish its green credentials as it faces challenges in key Liberal seats from independents pressing for more aggressive action on climate change.
“The impact we’re here to talk about today is a huge investment in Australia’s future. Not just our energy future, not just our climate future, but our economic future,” Morrison said, speaking at the Snowy Hydro site.
Snowy will add 2,000 megawatts (MW) of power generation through so-called pumped hydro, which acts like a huge battery, pumping water uphill between two dams when there is cheap wind and solar power on the grid, and releasing that energy when the wind eases and the sun goes down.
“This will be one of the largest pumped hydro projects in the world,” said Morrison. “Which not only reduces electricity prices and takes the pressure off electricity prices, but it creates the reliability of electricity supply.”
First output from the expansion, set to increase Snowy’s capacity by 50 percent, is expected in late 2024.
Snowy last year said the expansion was justified as it would cost half as much as building the batteries and natural gas-fired power plants that would be needed to prevent blackouts in the mid-2020s, following the closure of some coal-fired plants.
Snowy is fully owned by the federal government which last year bought out the company shares owned by the states of New South Wales and Victoria for A$6.2 billion to help smooth the way for the expansion.
Reporting by Sonali Paul; Editing by Tom Brown