'Eight game-changer contracts will help push energy costs lower'

Eight new suppliers will give Snowy access to enough renewable power to power 500,000 homes. The solar/power projects will be spread across NSW and Victoria, and one is expected to be Neoen’s Parkes solar farm.

Snowy Hydro boss Paul Broad said the deal – which came after Snowy Hydro sought expressions of interest – was a gamechanger.

"This will create us as the fourth serious player in the energy market in New South Wales and the fifth in Victoria: the added competition will be to the benefit for consumers," Mr Broad said. "The market will respond."

The eight projects, totalling 888 megawatts (MW), are located across New South Wales and Victoria and are expected to generate about 2.8 terawatt hours of energy annually. 

“This will bring on significant new energy supply and therefore much-needed competition to the market, and will enable Snowy Hydro to pass on lower wholesale prices to our customers. “

Snowy Hydro said the renewable energy it has contracted will enable it to offer “very competitive, firm wholesale prices (ie. the cost of the raw renewable energy plus the cost of ‘firming’) - for below $70/MWh for a flat load, for up to 15 years”.  

“Snowy Hydro is a key provider of fast-start, “capacity”-type products, and we keep the lights on at times of high demand. However, we are ‘energy short’ (meaning that we do not generate enough energy from own power stations to cover all of our customers) so we have to purchase energy from the wholesale market. We are one of the largest energy buyers in the NEM and, just like households, we are exposed to high wholesale prices.

“Over the last 12 months, there have been rapid changes in the NEM and competitive pricing across all generation technologies has seen the cost of renewables fall.

“Snowy Hydro was overwhelmed with the level of interest in our Renewable Energy Procurement Program, which saw more than 17,600MW of projects submitted through the procurement process. All eight winning projects are expected to come online within the next two years.

“Snowy Hydro’s existing hydro, gas and diesel assets give us the ability to ‘firm’ up vast amounts of intermittent renewable generation today to ensure energy is available when needed. 

“In simple terms, ‘firming’ works by transforming intermittent energy into reliable energy so it’s available on-demand when a customer needs it. While the energy output of individual projects varies, Snowy Hydro’s power stations can work in combination with wind and solar, creating ‘firm’ reliable energy.

“Snowy Hydro owns Red Energy and Lumo Energy, which together have more than one million customers”.

The eight projects will add 2.8 terawatt-hours a year of power to Snowy's existing 4 TWh of supply, meaning it will not need to buy extra power from the wholesale market to supply its customers.

Once the new solar and wind plants come online in 2020, Snowy intends to offer sub-$70/MWh prices for firm, flat supply under contracts of up to 15 years.

"We would argue that the price we are putting in the marketplace today for 2020 is significantly below any forward curve that any of the businesses would have," Mr Broad said.

"It will put significant downwards pressure on the wholesale business which will lead to significant downward pressure on energy prices."

Snowy already purchases solar power generated by the Tailem Bend solar project and the Lincoln Gap wind farm in South Australia.