Full Breakdown
Snowy Hydro’s Snowy 2.0 Pumped-Hydro Project Faces $25 billion Cost Surge and New 2029 Commissioning Delay
By Drooid · · How we work
Core Event
The project’s full commissioning has been pushed back to the end of 2029, according to principal contractor Future Generation Joint Venture (FGJV).
Background & Context
Snowy 2.0, a 2.2-GW generation and 350 GWh storage scheme, was announced by Prime Minister Malcolm Turnbull in March 2017. Initial estimates were about $2 billion, later rising to $6 billion, then $12 billion after a 2021 reset. Design immaturity and limited geological surveying have driven further overruns, moving the original 2021 target to late 2029.
Data & Statistics
- Revised cost range: $22.2 billion target; up to $25 billion possible.
- Construction progress: 96 % of design completed (up from 44 % in 2023); 65 % of tunnelling finished; 95 % of drill-and-blast tunnelling completed.
- Economic benefit estimates (GHD): $18 billion gross value added, $9 billion in wages, about $7 billion in present-value savings to electricity customers to 2075.
- Price impact: In a low-wind, low-solar winter week, Snowy 2.0 could cut peak wholesale prices by roughly 70 % versus an equivalent battery solution (GUD analysis).
Official Statements & Responses
Climate change and energy minister Chris Bowen and finance minister Katy Gallagher said the government remains transparent about the pressures and is working to secure the best outcome for taxpayers, energy consumers and the grid. They attributed the revised cost and schedule to construction-sector cost pressures and significant geological challenges.
Snowy Hydro chief executive Dennis Barnes said the project remains a valuable national asset and that there is “no need for a write-down.” He noted the $22.2 billion figure is treated as “cash” rather than a discounted future amount and that the company will seek additional federal funding, pending cabinet approval.
Criticism & Opposition
Former energy minister Angus Taylor was cited as having known about earlier cost blowouts before the 2022 election. Opposition leader Lily D’Ambrosio warned that the Victorian Liberal pledge to scrap the VNI-West transmission line could “guarantee a massive increase” in Victorian power bills and hurt the project’s economics. Barnes agreed that cancelling VNI-West would be “not good for consumers.”
Verbatim Quotes
- “We’re now much further through the project than at the 2023 reset, meaning we’ve learned more and more risk is behind us,” — Dennis Barnes
Conflicting Reports & Gaps
Consultant GHD’s benefit figures are “gross input-output estimates” that do not account for displacement of activity or opportunity costs, according to GUD analysis, which cautions its findings are not a formal cost-benefit appraisal. The revised cost estimate also excludes borrowing costs, extra transmission needed, and environmental damage at Kosciuszko National Park, leaving the total fiscal impact uncertain.
What’s Next
Snowy Hydro will release its annual report with further details on projected net benefit. Federal approval is still required for any additional funding, and the outcome of the upcoming Victorian state election could affect the VNI-West transmission line, influencing the project’s final economics and timeline.