Overview: Snowy 2.0 cost blowouts push funding higher
Snowy Hydro has disclosed that the Snowy 2.0 renewable energy project will require additional funding after cost overruns pushed the program beyond previous financial targets. The company has ordered the principal contractor, Future Generation Joint Venture (FGJV), to conduct a line‑by‑line reassessment of the project before any extra funding is sought. The admission marks another chapter in a project that has endured repeated budget and schedule setbacks since its inception.
Background: how the price tag has spiralled
When Snowy 2.0 was first announced, the project was expected to cost around $2 billion. The estimate later ballooned to roughly $12 billion, and now Snowy Hydro says even that figure may understate the true funding need. In a briefing to shareholders and the public, the company stressed that it would not commit to further spending until it completed the line‑by‑line reassessment to identify every cost pressure and potential saving opportunity.
Recent milestones and cost pressures
Snowy Hydro has pointed to several significant sources of cost pressure, including productivity targets not being met, and rising supply chain costs that have hit several major projects across the sector. A notable item cited by the company is the fourth tunnel boring machine (TBM), which was acquired to accelerate work and avoid months of delay. The TBM costs, estimated at about $75 million, will now be covered by the project’s funding plan to keep construction on track.
Pay rises and workforce implications
Crucially, the announcement comes after workers on Snowy 2.0 were granted a pay rise of at least $50,000 in the preceding weeks. The company emphasised that wage adjustments, while necessary to secure skilled labour and tenure on the site, contribute to the overall project cost. Snowy Hydro has sought to balance timely completion with workforce stability, a dual aim that remains central to the project’s execution strategy.
What does the reassessment mean for timelines?
Mr Barnes acknowledged the graph of costs and schedules would “not be happy” about needing more money but stressed that accountability for the 2023 forecast rests with leadership, not just contractors or workers. He said, “The contractor and all of the workers on the job have done a great job. It’s just costing us more to get that done. That’s obviously making me unhappy.”
The cost reassessment process is expected to take up to nine months, with transparency the stated objective as the project moves toward a revised funding request and revised progress milestones. Snowy Hydro reported that the project was more than two-thirds complete and that tunneling delays and safety concerns had delayed earlier work, but the site remains on track to complete in late 2028, according to current internal projections.
Project scope and significance
The Snowy 2.0 scheme involves building an underground hydroelectric facility in Kosciuszko National Park in New South Wales, connected by 27 kilometres of tunnels linking Tantangara Dam to the Talbingo Reservoir. Once operational, the project is expected to deliver up to 2.2 gigawatts of electricity to the national grid, contributing to climate and energy security objectives. The progress update highlights a broader pattern in large infrastructure projects worldwide: initial forecasts often underestimate true costs, while complex execution introduces additional risk factors such as geological conditions in cavern excavations and the performance of large‑scale tunnelling equipment.
Government and industry response
The federal government has said it will closely monitor the cost reassessment, with Energy and Climate Change Minister Chris Bowen stressing the need to ensure value for taxpayers. He noted that, when the government took office, the project had stalled under prior oversight and that progress under the current administration has improved safety and transparency while pursuing value for money. The government’s line is clear: the project must be delivered efficiently and within a framework that protects public funds.
FGJV has declined to comment on the reassessment process. As the nine‑month review unfolds, stakeholders will be watching for a clear articulation of the size of the problem, a credible plan to address it, and a revised timeline that aligns with fiscal and energy‑policy priorities.
Outlook: next steps for Snowy 2.0
With a line‑by‑line reassessment underway, Snowy Hydro will need to secure more funding, renegotiate milestones, and demonstrate that the project remains value‑driven for the public purse. The next steps will include a detailed findings report from FGJV, a formal funding submission, and renewed engagement with government and the community about the project’s long‑term benefits and risk management strategies. The path forward will hinge on achieving a careful balance between maintaining construction momentum and ensuring expenditures align with demonstrable value for taxpayers.
