SYDNEY (Reuters) - Australia’s federal government said on Friday it had purchased hydroelectric assets from the states of Victoria and New South Wales for A$6.2 billion ($4.8 billion), clearing its path to proceed with a national scheme to expand hydro generation.
Under pressure to plug power supply gaps which have led to blackouts, as well as cap soaring prices, Prime Minister Malcolm Turnbull announced plans last year to expand hydro generation in Australia’s southeast by around 50 percent.
Owning the assets itself makes it simpler for the national government to go ahead without the states controlling Snowy Hydro Ltd, the holding company that runs the giant scheme.
“It will enable ‘Snowy 2.0’ to go ahead,” Minister for the Environment and Energy, Josh Frydenberg, told Australian Broadcasting Corp. radio, referring to the government’s expansion plan.
“[It] will create 5,000 new jobs, more power for 500,000 new homes as well as lowering people’s power bill and helping to stabilize the energy system.”
Under the deal Victoria state will receive just under A$2.1 billion and New South Wales will receive A$4.2 billion for their shares in Snowy Hydro Ltd, which operates a giant hydroelectric scheme in Australia’s Snowy Mountains.
The states agreed to spend the proceeds on other infrastructure projects under the deal, which must be approved by the federal and Victorian parliament before it takes effect, a statement from the federal government said.
The national plan would add 2,000 megawatts of capacity to what is already the country’s biggest hydro scheme, and cost as much as A$4.5 billion.
A feasibility study last year found the project was viable and technically feasible, but it still requires a final investment decision in 2018, hinging partly on major upgrades of transmission lines.
If approved, the first power is expected in late 2024 at the earliest. The federal government said it would keep Snowy Hydro Ltd in public ownership, and make no changes to employment levels or water allocation.
Reporting by Tom Westbrook; Editing by Susan Fenton