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This report presents the findings of an independent study by Marsden Jacob Associates (Marsden Jacob) of the changing nature of wholesale energy supply in the National Electricity Market (NEM) associated with the increasing penetration of intermittent generation, and the market benefits that would be provided by the development of the proposed Snowy 2.0 scheme.

Report extract

A NEM framework that aims to provide increased security, future reliability, lower consumer costs and lower greenhouse gas emissions will require, as one of a number of solutions, large-scale pumped hydro storage. This will stabilise the power grid, lower consumer prices, and enable deeper penetration of currently poorly integrated variable renewable generation as it increases to meet Australia’s Paris Agreement commitments and beyond.

Marsden Jacob employed an evaluation framework developed by the Australian Energy Regulator for the purposes of determining the economic benefits Snowy 2.0 would provide to the NEM, termed market benefits. Marsden Jacob performed modelling to quantify the market benefits that Snowy 2.0 would provide and the impact Snowy 2.0 would have on wholesale energy purchase costs.

We modelled the NEM outcomes under two scenarios of mandated renewable generation entry (labelled ‘LRET+VRET Scenario’ and ‘Long Term (LT) Commitment Scenario’) with and without the development of Snowy 2.0. Additional economic renewable generation development above that mandated was allowed in each scenario. In each scenario, the difference between the with and without Snowy 2.0 cases represented the market benefits from developing Snowy 2.0.

The development of scenarios and modelling highlighted the uncertainties involved, particularly the level of battery installation that is influenced by factors that include the need for peaking generation to have fast start capability under 5-minute pricing and retailer and large customer ambitions / incentives to develop renewable generation with storage. The market benefits provided by Snowy 2.0 would increase through additional deferral of battery development.

Last updated 15 July 2020
Last updated
15 July 2020
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