Snowy's $40 Billion Money Pit

Snowy 2.0 is shaping up as the greatest infrastructure and financial disaster in our nation's history.

If it ever gets finished, and that is now a massive if, Australians could ultimately be left carrying a bill of more than $40 billion, while being locked into higher electricity costs for a generation. When this farce was first proposed, I was one of the few MPs in the country prepared to call it out. The full business case was deliberately kept from backbenchers, who were apparently expected to clap along like trained seals. Yet it took about 30 seconds of back-of-a-drinks-coaster arithmetic to see that Snowy 2.0 could never deliver the cheap electricity Australians were being promised.

It was pure politics... and a golden ticket for the grifters and spivs feeding off the renewables racket. Worse, it exposed a disgraceful failure of our parliamentary system. The Uniparty waved through a project involving the risk of billions of dollars of taxpayers' money without the scrutiny or serious debate such an enormous gamble demanded.

And here is the great deception at the heart of Snowy 2.0: It doesn't create energy. It destroys it.

Snowy 2.0 is a giant battery. Before it can generate a single unit of electricity, it must first consume substantially more electricity to pump water uphill. For every 1 unit of electricity Snowy 2.0 might theoretically return to the grid, if the thing is ever finished, it will require roughly 1.3 to 1.4 units of electricity to pump the water uphill in the first place.

The arithmetic is brutally simple: put roughly 1.4 units in and get about 1 unit back. The other 0.4 units are gone, lost through pumping, friction, turbines, generators, and transmission. In other words, for every unit eventually generated, electricity equivalent to as much as another 40% of that output has been consumed in losses.

Measured against the original electricity put into the system, that represents a loss approaching 30%. As the machinery ages, efficiency is likely to get worse. We are therefore spending tens of billions of dollars building an enormous machine that, by design, consumes considerably more electricity than it can ever return to the grid.

Then there is the environmental vandalism. Great swathes of the Snowy Mountains have been disturbed for tunnels, roads, and associated infrastructure, while huge new transmission lines require 180 metre wide corridors bulldozed through native forests to carry electricity to and from the project. Unique native fish populations, protected by geographical isolation for millennia, will face the threat of predatory species being transferred into previously isolated waterways through pumped-hydro operations. And from the Greens? Crickets.

But perhaps the greatest farce of all is the claim that Snowy 2.0 is somehow inherently powered by renewable energy. There is no magic label attached to the electrons used to pump that water uphill. Nor is there currently some vast reservoir of otherwise-wasted renewable electricity sitting around waiting to power Snowy 2.0.

If Snowy 2.0 were operating today, as Australians were originally led to believe it would be, flicking the switch to pump millions of tonnes of water uphill would not magically summon renewable electricity out of thin air. It would increase demand on the grid. When coal or gas is supplying the marginal generation, fossil fuels would effectively be helping pump that water back up the mountain.

During the planning stages in 2017, I met the then CEO of Snowy and asked him directly about the risks of drilling enormous tunnels beneath the Snowy Mountains, through difficult geology, deep underground, and in the middle of a National Park. I was assured it wouldn't be a problem. Today, Robert Gottliebsen writes in The Australian:

"An essential component of Snowy 2.0 is a 17 km tunnel that links the high dam with the low dam to enable water to be pumped up to the high dam and then regenerate power on the way down.

"In the middle of that huge tunnel is about 800 metres of some of the most difficult material in the world to drill through – the so-called Long Plain Fault Zone.

"The first drill that attempted the 17 km to link the two dams was called Florence and started at the top of the mountain. It encountered very difficult material (also forecast in the feasibility study) even before it reached the Long Plain Fault Zone.

"It was clear that it simply would not have the ability to get through the fault zone. And so, a new drill called Monica was ordered to tackle the 800-metre fault zone from the bottom.

"This drill is clearly better designed for the task, but there is still no certainty that it will be able to get through the 800 metres and link with Florence.

"Right now, concerns about the ability of Monica override any question of Snowy 2.0 costs. ... if the drill can't get through, then the entire project becomes a museum piece."

That should settle the argument. It is past time to cut our losses, cap the expenditure, and stop throwing good money after bad. If $27 billion has already disappeared into this white elephant, Australians would be better off recognising the loss than allowing politicians and bureaucrats to keep chasing their tails and sinking billions more into the project simply because they are terrified of admitting they got it wrong.

At $27 billion, the cost is roughly $1,000 for every man, woman, and child in Australia. For a family of five, that is about $5,000. And the meter is still running.

There comes a point when continuing to spend money is no longer an act of perseverance. It is recklessness. Abandon Snowy 2.0, and perhaps we could salvage one useful thing from this colossal failure: preserve part of it as a Museum of Government Waste and Folly, a monument to the climate panic, political hubris, and economic madness of the early twenty-first century.

Future generations could walk through its tunnels, look at the billions buried beneath the mountain, and ask the obvious question: How on earth did they let this happen? Hopefully, they would learn enough from our stupidity never to make the same catastrophic mistake again.

“When the government steps in and makes mistakes and has failures, they’re going to be big failures and not little ones.”
― Milton Friedman