Much has been written about the dismal failure of the NBN. We are spending $50 billion on an unreliable system that cannot be upgraded. This enormous investment in yesterday’s technology has seen the 13th largest economy in the world saddled with an internet speed ranking of 50th in the world behind many developing nations. Why? Because it was a Labor initiative that had to be destroyed.
When it comes to energy, the Coalition’s fixation with coal has been met by resistance from a market who is moving inexorably towards a low carbon future. So Malcolm, in order to look like he is doing something constructive, embarked on his “nation-building” Snowy Hydro 2.0. The announcement was made less than two weeks after the idea was first mentioned and with no consultation with the majority shareholders, the NSW government who own 58% and the Victorian government who own 29%. The federal government only own 13%.
In March 2017, without any studies having been done, Turnbull announced the scheme would cost about $2 billion and take 4 years to build. By December, that figure had blown out to $3.8 to $4.5 billion with a time frame of 7 years and that doesn’t include the essential transmission upgrade to actually get the power to the grid which will cost an apparently unknowable amount but media reports speculate at least another $1 billion.
A look at the feasibility study raises many questions.
“The detailed financial evaluation and commercial conclusions are confidential to Snowy Hydro. The benefits to Snowy Hydro have been modelled under a range of scenarios and future NEM outcomes. The financial benefits that have been modelled are conservative and are likely to understate the potential earnings that could be realised by Snowy 2.0.”
To me, that reads that the business case does not stack up so we are keeping it a secret.
The 27 km of 9m diameter tunnels necessary to link the two reservoirs will be concrete lined. A mix of tunnel boring machines as well as drill and blast techniques will be used for the tunnelling and excavation.
According to the study, the Kosciuszko National Park will be impacted by surface works.
The key environmental aspects and their potential impacts include the following:
Establishment of construction work areas that may restrict the access of recreational users and temporarily impact the amenity of the Park
Establishment of surface earthworks that require the clearing of vegetation, may damage critical habitat and fauna, and may spread weeds
Underground excavation that may cause changes in groundwater levels
Spoil disposal that may impact surface waters and terrestrial environments
Inter-catchment water transfers that may spread pest species of fish
Renewable energy will certainly require storage to be reliable but there are alternatives.
In September this year, researchers at the Australian National University released a study, funded by a $449,000 grant made by the Australian Renewable Energy Agency, identifying at least 22,000 suitable locations for pumped hydro.
ANU engineering professor Andrew Blakers said “No matter where you are in Australia, you will find a good pumped hydro site not very far away from where you, or your wind or your solar farm is located. We only need to build about one or two dozen to support a 100 per cent-renewable electricity grid.”
Dr Stocks from the ANU Research School of Engineering said “Annual water requirements would be much less than half that of the current fossil fuel system because wind and PV do not require cooling water.”
Co-researcher Mr Bin Lu said all of the potential short-term off-river pumped hydro energy storage (STORES) sites were outside national parks and urban areas. Each site had a storage potential range of 1-300 GWh which could deliver maximum power for five to 25 hours, depending on the size of the reservoirs, going from zero to full power in about one minute.
It would certainly be worth investigating if these projects could be built quicker, at less cost, closer to existing transmission lines, with less environmental damage, and providing local employment opportunities in different regions.
But that would require actual planning and wouldn’t lend itself to photo opportunities.
There are similar questions about the advisability of Barnaby’s baby, the inland rail.
At an estimated cost of over $10 billion, the business case states “Inland Rail is expected to increase Australia’s GDP by an estimated $16 billion by 2050.”
That doesn’t seem like much of a return. Infrastructure Australia requires the use of a discount rate of 7 per cent when assessing the benefit of a project because a dollar of benefit in the future is worth less than a dollar of benefit today.
Using that approach, the benefit cost ratio of the inland rail is 1.02 ie every dollar invested will bring a benefit of 2c. And to get that, they are counting less accidents on the road and reduced emissions from using rail rather than trucks, ignoring the likely arrival of electric trucks which may even be driverless.
Unsurprisingly, and in a move reminiscent of our emissions reduction accounting tricks, they chose to quote a 4% discount which gives a supposed cost benefit of 2.62 – a very big difference.
“A four per cent discount rate has been adopted in preference to a more conventional seven per cent discount rate. The long term nature of the project, which is consistent with international practice for large scale infrastructure projects, together with a review of the 20 year historical Australian Government bond rates supports the application of a four per cent discount rate for Inland Rail.”
Farmers will still have to get their produce to and from the railway, presumably by truck. It will do nothing to revitalise regional towns as endless freight trains barrel on through.
Would it be better to build high speed passenger rail?
The cost would certainly be higher but it would free up road, rail and air transport for freight and allow people to move out of the cities giving regional Australia the boost it needs.
It might also make Badgery’s Creek airport unnecessary.
Speaking of which, no plan has yet been made for a rail link from the new airport – another stellar example of lack of planning in favour of an announcable. Apparently there is an “Options assessment underway” with six alternatives being considered (read we haven’t even made a plan yet).
This is despite their own report stating:
“Provision of efficient transport options connecting the Western Sydney Airport to other key hubs such as the CBD, Parramatta, Western Sydney Employment Area, and North West and South West Growth Centres is critical to avoid unnecessary travel delays and enable sustained economic growth.”
The way this government works is to jump on a plane with the media in tow, fly somewhere, don a high viz vest and hard hat (shovel optional), make a huge announcement….and then start doing research into if it’s a good idea or not.
It would be a tad more convincing, and much more productive, if they did the research first and made a coherent plan before they announce things.