Background and latest funding reassessment
Snowy Hydro has confirmed it will need additional funding to complete the Snowy 2.0 renewable energy project, with costs continuing to climb past a prior $12 billion target. The company has ordered principal contractor Future Generation Joint Venture (FGJV) to undertake a meticulous, line-by-line reassessment of the project before any further funding is sought. Chief executive Paul Barnes acknowledged the financial miscalculation of the 2023 forecast, saying he was “not happy” about the need for more money but accepting responsibility for the forecast error.
Barnes stressed that the project team and workers had performed well amid rising costs, but noted that completing the work would require more resources. 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.”
Why costs are rising
The reassessment comes after Snowy Hydro highlighted several cost pressure points. Among the significant drivers are productivity shortfalls, supply chain costs, and the fact that a fourth tunnel boring machine (TBM) bought for the project could no longer be funded within the project’s existing budget. The $75 million TBM was to be procured in 2024 to accelerate tunnelling work and avert longer delays, a move Barnes argued would be far less costly than allowing delays to accumulate.
What a fourth TBM means for schedule
“If we didn’t commit to a fourth tunnel boring machine … then the project would have been delayed by many, many months,” Barnes said. “A delay is much more costly than procuring a fourth tunnel boring machine.”
While Barnes declined to forecast the exact additional funding required, he pledged transparency once the size of the problem is known. He added that the cost reassessment process could take up to nine months, during which the project’s finances and milestones will be closely reviewed.
Project status and timeline
The Snowy 2.0 project, located in the NSW Snowy Mountains at Kosciuszko National Park, involves a 27-kilometre network of tunnels linking Tantangara Dam to the Talbingo Reservoir and an underground hydropower station. It is designed to deliver up to 2.2 gigawatts of electricity to the national grid. Despite the blowouts, Snowy Hydro says the project remains on track for a December 2028 completion date, noting tunnelling delays and a halt in some work due to safety concerns.
Managerial updates point to progress in the power station cavern, with Barnes noting the project is now more than halfway finished in the cavern and that the team is comfortable with the timeline. Snowy Hydro also disclosed that, as of the latest assessment, the project was 67 percent complete.
Government oversight and broader implications
The federal government has been apprised of Snowy Hydro’s financial status in recent weeks. Climate Change and Energy Minister Chris Bowen said the government will scrutinise the cost reassessment findings and emphasised the need for value for taxpayers. Bowen asserted that the project has advanced significantly since earlier concerns about planning and oversight under a former government, highlighting improvements in safety and transparency as the project progresses.
While the reassessment aims to restore value for money, industry observers note that cost overruns on major energy projects can affect both policy credibility and long‑term investment in renewables. The government’s engagement signals readiness to balance delivering Australia’s clean energy goals with prudent fiscal management.
What happens next
FGJV has declined to comment on the reassessment. The nine-month process will determine the exact scope of additional funding and potential adjustments to the project’s schedule. Snowy Hydro emphasises its commitment to delivering Snowy 2.0 on its 2028 deadline while ensuring value for taxpayers remains a central consideration.
Bottom line
Snowy 2.0 remains a cornerstone of Australia’s renewable energy ambitions, but cost blowouts and a lengthy reassessment underscore the financial and logistical complexities of building large-scale underground hydropower infrastructure. As the line-by-line review unfolds, all eyes will be on how the final funding package balances progress with prudent spending.
