Environment

Turnbull announces $2b expansion for Snowy Hydro scheme

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A massive expansion of the Snowy Hydro scheme could act as a back-up to secure the national electricity market as more wind and solar comes into the grid.

The iconic Snowy Hydro scheme will get a $2 billion expansion in what has been called a game changer for east coast power supply.

It's expected the new project - the first major expansion since the scheme was completed in 1974 - will increase its output by up to 50 per cent, or enough to power an extra 500,000 homes.

Supercharging the Snowy scheme's storage would help the electricity market cope with peak demand at a time when baseload energy is closing and intermittent renewables like wind and solar are not providing the reliable capacity Australian businesses and homes need, Snowy Hydro managing director Paul Broad said on Thursday.

"The creators of the scheme foresaw a time when its capabilities may need to be expanded and, as a result, there are very real options in-built in the scheme's design to extract more value to the community," he said.

The federal government will give $500,000 for a feasibility study to examine four possible sites for the expansion.

The final design could include three new tunnels stretching 27km and new power stations - but no new dams - and is expected to take between four and seven years to complete.

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Prime Minister Malcolm Turnbull said the unprecedented expansion would help make renewables reliable.

Energy Minister Josh Frydenberg confirmed the price tag will be in the billions of dollars.

"The amount of new power we're talking about here will be bigger than the Hazelwood power plant which is scheduled to close at the end of this month," he told ABC radio.

"So this is a game-changing announcement, something that is iconic in Australia and I think it should be welcomed by all Australians."

The Australian Renewable Energy Agency, which is paying for the feasibility study, said expanding the Snowy scheme would help to deliver its goal of ensuring a smooth transition to a renewable energy future.

"Pumped hydro is economically viable right now and supports our grids by providing long-term energy storage capacity that's available on demand," chief executive Ivor Frischknecht said.

Labor gave cautious support to the project, which Opposition Leader Bill Shorten said was interesting and worth exploring.

But he wanted more details about the cost, technical solutions and how long it would take.

"What we really need to know is this just more talk from Malcolm Turnbull or are we going to see something actually happen?" he told reporters in Hobart.

The Climate Institute said while it was great to see more government investment in renewable energy, especially storage, Thursday's announcement didn't have enough details to answer important questions such as its environmental impacts in Kosciuszko National Park and how it would fare in drought years.

Clean Energy Council chief executive Kane Thornton said it was a smart move from the federal government and the Snowy plan should be considered as one of a range of short- and long-term options to fix energy problems.,

"Any way in which we can expand our hydro and use it more efficiently to meet our peak demand will reduce our reliance on gas and indeed allow us to use much more renewable technology like wind and solar," he told AAP.

Nevertheless, the half-decade timeframe for the Snowy expansion meant it would run into the same challenges as many other investments in needing stable energy policies from the government.

Watch: Stories from the Snowy Mountains Scheme

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