Snowy Hydro has announced that the $12bn budget for the Snowy 2.0 pumped hydro project in Kosciuszko National Park is no longer achievable, prompting a line-by-line cost reassessment. The project, which is 67% complete, has been hit by supply chain cost increases and delays caused by a tunnel boring machine becoming wedged in hard rock.
Chief executive Dennis Barnes said the reassessment, to be conducted by Italian construction partners Future Generation Joint Venture over nine months, was necessary due to significant price increases for the underground power station and delays from stoppages in 2024. The cost of adding a fourth boring machine cannot be covered within the current budget.
The project, first touted in 2017 at $2bn, has seen costs escalate to nearly $13bn in 2023. Barnes noted that productivity improvements since a major reset in 2023 have not been sufficient to meet the schedule at target cost. The project aims to link two existing reservoirs with 27km of tunnels to generate 2,200 megawatts of power.
The Albanese government, as the sole shareholder through taxpayers, has been informed of the looming blowout. Climate Change and Energy Minister Chris Bowen said the cost reassessment is disappointing and will be scrutinised, but stressed the project is critical for Australia's energy future, providing enough renewable energy to power three million homes for a week.
Barnes defended the project's necessity, stating it is essential for long-duration storage in the energy transition. Despite confidence being dented, he argued that informed observers recognise its importance. The project is expected to be completed by the end of 2028.
