Snowy 2.0 is considered an important project to support the east-coast power grid’s transition to renewable energy. The project will use surplus electricity to pump water uphill and dispatch it during periods when demand is high and supply is low, such as when the wind isn’t blowing and the sun isn’t shining.

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However, the $5.9 billion Snowy 2.0 project is running behind schedule and is now not due to be completed until 2027. Its delays have contributed to the Australian Energy Market Operator’s concerns about the risk of electricity supply gaps widening in the coming years amid impending closures of several of Australia’s large coal-fired power stations.

Up to five-coal fired power stations, including the Yallourn generator in Victoria’s Latrobe Valley, NSW’s Liddell, Eraring and Vales Point power plants, and Queensland’s Callide B, are expected to shut down this decade, removing 13 per cent of the east-coast grid’s generating capacity.

Gaps in the market begin to emerge from 2025, AEMO warns – first in NSW due to Origin Energy’s possible closure of Eraring, then in Victoria from 2026 because of the closure of two gas-fired power stations in South Australia.

Delays to Snowy 2.0 have raised suggestions that Origin Energy may extend the life of Eraring beyond 2025. When it announced its intention last year to close the plant early, the company gave a commitment it would continue evaluating market conditions and not withdraw the plant in 2025 unless the grid was equipped to handle its exit.

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