Escalating costs push Snowy 2.0 beyond forecast
Snowy Hydro has warned that the Snowy 2.0 renewable energy project will require additional funding as its price tag continues to spiral beyond earlier projections. The project, which began with a modest headline figure and has already swings between multi‑billion forecasts, is facing a fresh line‑by‑line reassessment before any extra money is sought. The latest disclosure follows weeks of scrutiny and a process designed to restore confidence in the project’s value for taxpayers.
Initial estimates of Snowy 2.0 hovered around a few billion dollars, but the program has since been revised to a$12 billion target, and the company now says even that figure may be inadequate. The federation’s budget watchdogs and the public are being asked to watch closely as the reassessment unfolds, a nine‑month process meant to determine how much extra capital is truly required and where it should be spent.
What Snowy 2.0 is—and why it costs so much
Located in the NSW Snowy Mountains within Kosciuszko National Park, Snowy 2.0 envisages an underground hydropower station connected by 27 kilometres of tunnels that link Tantangara Dam to the Talbingo Reservoir. When completed, the project is designed to deliver up to 2.2 gigawatts of electricity to the national grid. The scale is immense, and so are the engineering challenges, including difficult geology, safety considerations, and the complexity of tunnelling in a high‑value environment.
Fundamental drivers of the cost overrun include productivity shortfalls, elevated supply chain costs, and the financial strain of a fourth tunnel boring machine (TBM). The TBM was added to accelerate progress, with Snowy Hydro confirming a $75 million purchase in 2024 to keep the schedule on track. The company has argued that without the fourth TBM, delays would push back key milestones by many months—an outcome the project cannot afford, given the magnitude of the investment.
Line‑by‑line reassessment and funding questions
The principal contractor, Future Generation Joint Venture (FGJV), has been ordered to conduct a detailed, line‑by‑line review of the project. This assessment is intended to identify exactly where costs are increasing and to determine how much additional capital is truly necessary. Snowy Hydro has not yet disclosed a new funding figure, saying only that it will be transparent when the size of the problem is known.
Company chief executive Paul Barnes acknowledged frustration with the growing costs but stressed responsibility for forecasting accuracy. “I’m not happy that the project would need more money, but I take responsibility that we didn’t get this cost forecast right in 2023,” he said. He added that workers and contractors had done solid work and that the overrun stems from external pressures rather than poor workmanship.
In parallel with the reassessment, Snowy Hydro revealed that worker pay rises had been granted—a reminder that labor costs are a visible component of any infrastructure project and can influence overall budgeting. The exact implications for the project’s total funding remain to be seen as the nine‑month review progresses.
Governance, oversight and the road to completion
The Snowy 2.0 program has long been a focal point of national energy policy, with the government keen to see it delivered while safeguarding public value. Federal energy and climate policy minister Chris Bowen acknowledged the reassessment but asserted that the project must deliver value for taxpayers. He said the government would monitor the cost review closely and that progress—while not perfect—has continued, with safety improvements at the site and substantial work completed.
Officials note that the project remains on track for a 2028 completion date, albeit with the possibility that the reassessment could adjust the schedule. Snowy Hydro reported the project was 67 per cent complete, and leadership emphasized that the tunnelling program has endured delays and safety pauses, yet progress remains tangible. The government’s involvement is expected to intensify as the line‑by‑line review unfolds, ensuring transparency and accountability as the final funding needs become clearer.
What happens next
As the nine‑month cost reassessment proceeds, the central question for stakeholders is how much additional funding will be required and how it will be allocated. The decision will hinge on a careful balance between finishing the project on time, maintaining safety, and delivering value for the taxpayer. Snowy Hydro has pledged transparency in reporting its findings, and the government has promised close scrutiny to ensure that any further funding aligns with national energy goals and fiscal responsibility.
The fourth TBM—why it matters
The procurement of a fourth tunnel boring machine represents a deliberate choice to counter production bottlenecks. While expensive, Snowy Hydro argues that the cost of delaying the project would be far higher in the long run. The reassessment will assess whether this investment remains the most efficient path forward given evolving market conditions and technical challenges.
Looking ahead
Snowy 2.0’s fate remains a banner issue in Australia’s energy debate. Whether the nine‑month review yields a larger capital requirement or a reprioritization of scope, the outcome will shape the country’s renewable energy strategy and its ability to meet future reliability and emission targets. For now, the project remains a work in progress—a testament to the complexities of delivering large‑scale infrastructure in a dynamic energy market.
