The cost of the Snowy Hydro 2.0 renewable energy project has blown out to as much as $25bn, with completion now pushed back to late 2029. This was reported by Qazaqyia.kz citing The Guardian.
First touted by the Turnbull government in 2017 with a price tag of $2bn, the project in the Kosciuszko national park has seen its cost increase dramatically over time. In 2023 it was revised to almost $13bn, with construction due to be completed by the end of 2028. But new projections by the Snowy Hydro company, released on Thursday night, show it will now cost at least $22.2bn, with contingency for a further increase to $25bn.
Machine tunnelling is now 65% complete, and major excavations are in their final stages. Work to build the new underground power station is under way, with about 5,000 people at work on the project. But the project reset shows Snowy 2.0 won’t be completed and fully commissioned until 2029.
The Albanese government plans to announce additional project oversight and financing structures for Snowy 2.0 in coming weeks. Another injection of taxpayer funds is expected, along with possible private financing components.
In March 2017 the Snowy 2.0 feasibility study was announced. The Turnbull government called the plan a $2bn intervention in the energy market, with completion expected by 2026-27. The Commonwealth said it would buy out state government shares in Snowy Hydro Limited. The board approved a feasibility study estimating the cost at between a $5.4bn ‘low case’ scenario and a $6.9bn ‘worst case’. The board later approved a final investment decision with a $6.1bn cost estimate. The NSW government gave planning approval for exploratory works, and Commonwealth environmental approval was received. The first, second and third tunnel boring machines were commissioned, with the third known as Florence. Chief executive and managing director Paul Broad resigned. Florence became stuck after hitting soft ground 150m into a 15km tunnel excavation and remained stuck for nearly a year. The expected total cost increased to $12bn and the completion date was pushed out to 2028. Snowy Hydro said it expected another major cost overrun and ordered a reassessment of the project. The total cost is expected to reach $25bn, with the completion date pushed to late 2029.
The project has been beset by challenges, including major delays when a specialist boring machine became bogged and wedged in hard rock. The project’s timeline and extraordinary cost overruns have been blamed on its unique nature, significant risk and technical complexity. The boring machine, known as Florence, is still not yet at the halfway point of its 15km tunnel work. Principal contractor Future Generation Joint Venture (FGJV) also faced “cost estimation challenges,” according to the company. Since the project was signed off on in late 2018, more detailed technical analysis has been required, while FGJV has missed productivity targets and failed on cost and planning performance. Global price rises for construction equipment, services and staff have all exceeded early estimates.
The project aims to link two existing Snowy reservoirs with tunnels up to 27km long. Once completed, it will be able to generate 2,200 megawatts of power and provide 350,000 megawatt-hours of storage.
Despite the soaring cost and repeated delays, Snowy Hydro chief executive Dennis Barnes said the situation could have been worse. “This project is incredibly complex, it is off the charts even for mega projects,” he said.