Snowy Hydro has revised the estimated cost to complete its Snowy 2.0 expansion to $22.2 billion, with allowances made for a potential $25 billion total, reflecting ongoing challenges in one of Australia’s most complex infrastructure projects. The company cited factors such as geological difficulties, productivity issues, and global supply chain disruptions as key drivers behind the increased budget.
Snowy 2.0 aims to expand the existing Snowy Mountains Scheme, a hydroelectric and irrigation complex that has contributed to Australia’s energy security for over 75 years. The project involves constructing an underground pumped hydroelectric power station nearly one kilometre beneath the surface, alongside more than 40 kilometres of tunnels through difficult and unpredictable geological conditions.
According to Snowy Hydro’s chief executive, Dennis Barnes, the project has progressed substantially since its “2023 reset,” a midpoint assessment that saw only 44 percent of design work completed. Now, with approximately 96 percent of the design finalized, the company expects much of the cost uncertainty related to design immaturity to be mitigated. Recent milestones include the completion of excavation by tunnel boring machine Lady Eileen Hudson and the nearing halfway point of tunneling by the machine Florence, as well as the commencement of underground power station construction.
Barnes noted that shifting away from a fixed-price contract model in 2023 helped avoid potentially greater budget overruns and contractor disputes. Measures to improve project oversight have included establishing an operational controls office, bringing in external megaproject specialists for board-level review, and appointing new leadership focused on daily site productivity and risk management.
The expansion is designed to provide large-scale, long-duration energy storage to complement Australia’s increasing renewable generation capacity, particularly as coal-fired power stations retire. Snowy 2.0 is intended to support the electricity grid during periods of low wind and solar output, addressing gaps that short-duration battery storage cannot fill. The project is planned as a 150-year asset, serving as a key piece of national infrastructure to ensure energy reliability and affordability.
Approximately 80 percent of the total project investment is being spent within Australia, supporting domestic businesses and regional employment. Snowy Hydro emphasizes the long-term national significance of the expansion, viewing it as a generational investment to underpin Australia’s transition to a low-emission energy future.
Despite the challenges and cost increases, Barnes expressed confidence in the project’s momentum and its role in securing Australia’s energy sovereignty. He highlighted the dedication of the more than 5,000 workers involved and reiterated the project’s strategic importance for future generations.