The much-hyped dream of cheap, green power is steadily turning into a black nightmare of huge losses for not much gain worldwide with Snowy 2.0 and the offshore wind sector in Europe leading the way.

As widely publicised in late October cost estimates to complete the gigantic pumped-hydro project known as Snowy 2.0 now stand at $20 billion or ten times the estimate given when former prime minister Malcolm Turnbull announced the project in 2017. As the project’s boring machine is now bogged deep underground requiring considerable work to extricate it and complete the tunnel being excavated, estimates are set to blow out even further.

In the UK, at about the same time, the many proponents of offshore wind farms  were embarrassed by the revelation that the cheap power prices supposedly being offered by those farms were a sham. Previous auctions for wind farms areas to be developed which involved the developers bidding for a guaranteed price had delivered a reasonable £44 ($A84) a Megawatt hour. But power was never delivered at that price.

A loophole in the earlier contracts allowed the developers to simply not trigger the price guarantee and sell power into the grid at the much higher spot wholesale price. For the past six months the wholesale price has varied considerably but has not been below £50 and often been above £100 per MWh.

The government offered more offshore wind areas for development in September, but on contracts that did not have that loophole, and were embarrassed to find that no bids at all were lodged. In October the UK Guardian reported Tom Glover, country chair of the UK arm of German power group RWE, as saying that developers must be offered between £65 and £75 MWh for the power generated from wind farms before any new offshore farms will be built.

This is about 70 per cent more than the earlier price which was never achieved and is no better than present wholesale prices with the added disadvantage that the power will be intermittent. As the industry has previously complained that cost pressures mean that they will lose money on contracts for £75 MWh achieved at last year’s auctions on projects yet to be built, the final price may be far higher,

In Europe wind farm company Gamesa, a division of Siemens Energy, turbine maker Vestas and wind farm specialist Ørsted have all reported problems, with the installation of wind turbines proving just as prone to cost overruns as conventional infrastructure. Deep-seated problems at Gamesa, in particular, noted in ‘Gone with the wind’ (Speccie 15 July), have resulted in the parent Siemens issuing two profit warnings in four months. The company is now asking the German government for guarantees on long-term projects that its balance sheet may not be able to support.

Developers in the US, after sniffing the financial wind, have stayed well away from auctions for offshore wind areas in the Gulf of Mexico, despite the generous incentives in the Biden administration’s Inflation Reduction Act, and the government’s determination to make offshore wind a cornerstone of the country’s green economy.

That area would make any developer cautious however, as the gulf has low wind speeds generally and is regularly visited by hurricanes. Another problem is the potentially hostile state of Texas. Although the state has developed a major wind power industry on its open prairies into a major additional business for farmers exporting power to other states, it remains a hard-line Republican area. Another auction for areas off the coast of Louisiana attracted one bid.

Although the US offshore wind sector is still developing, with the third wind farm receiving federal government approval earlier this year, there has already been talk of subsidies for such developments.

Despite all those problems with offshore wind worldwide the Victorian government is forging ahead with plans to develop its own region off the coast of Gippsland, and despite the intractable problem of storing the energy from that intermittent source.

When it is complete the Snowy project may store 350 GWh or maybe 12 hours’ worth of demand for the east coast grid. The Pioneer-Burdekin pumped-hydro project in Queensland may store 250 GWh of power but is still in the assessment and design phase. Another private project using the pit created at the Kidston gold mine in Far North Queensland will store just 2 GWh, with the developers also admitting to cost blowouts, although nothing like the scale of the Snowy.

However, anyone with cursory knowledge of the wind droughts that occur in  South East Australia – these can clearly be seen in the wind production figures available from the National Energy Market – may estimate that at least three Snowy 2.0s will be required to tide the grid over long windless periods. That estimate does not consider the problems involved in recharging the dams, which may take days, or more extreme conditions such as a very hot summer combined with a long wind drought. To really weatherproof the network perhaps ten Snowy 2.0s would be a good idea. Given Australian’s geography this would seem impossible.

But if the grid does not have at least a few huge dams storing power, as is looking increasingly likely, then what is supposed to happen when the coal plants are decommissioned? Commentators have pointed hopefully at batteries but this is so much wishful thinking. The much publicised Hornsdale Power Reserve in South Australia, Elon Musk’s big battery, holds about 200 MWh at a cost of $126 million. Powering the state for one day would require 185 such batteries, and never mind the problems of replacing batteries as they wear out or finding enough batteries at any price thanks to the present craze for electric vehicles.

Batteries have certainly become cheaper since 2017 when the Hornsdale facility was built. A price index compiled by the consultancy Statista shows that lithium ion batteries cost $US242 per kilowatt hour in 2017 as opposed to $US152 in 2023 but prices were at $US150 in 2020, indicating that they may have levelled out. In any case, batteries would have to fall very substantially in price to have any hope of becoming practical for grid-scale storage. Then there are all the problems of expanding the production of batteries and resulting damage to the environment caused by mining the materials required.

All this means that when the coal-fired power plants close down, Australia’s east coast may be left without conventional or renewable energy generation and no means of storing the energy that is generated. Policymakers, or at least those who cling to the notion of renewable energy transition, have been left with an insoluble dilemma.