Snowy Hydro’s board has explored the possibility of terminating its contract with Webuild, the Italian firm leading construction on the Snowy 2.0 pumped hydro expansion, amid rising tensions over significant cost overruns and project delays. The project, Australia’s largest renewable energy development, has experienced multiple budget increases and timetable slippages, prompting close scrutiny from both the federal government and industry observers.
The idea of dismissing Webuild was considered at several points since the contractor’s appointment. Soon after FGJV—the joint venture between Webuild and Perth-based engineering firm Clough—was engaged as the major contractor in early 2020, Snowy Hydro commissioned external consultants to assess the financial and scheduling implications of replacing the consortium. Draft findings warned such a move could increase costs by up to 25 percent and push back power generation timelines by 25 percent beyond the then-estimated start date of 2026.
This review process was revisited in mid-2022 amid mounting financial pressures, with Clough facing insolvency and the joint venture seeking an additional $2.2 billion in COVID-19-related compensation. Updated advice suggested that removing FGJV could extend delays by two to three years and inflate the total cost by between 35 and 46 percent. Clough ultimately entered administration in December 2022.
In early 2023, Snowy Hydro again examined contractual options, engaging legal counsel to evaluate the risks of terminating the contractor fully or partially. The legal analysis highlighted potential protracted litigation and reputational risks that might hinder Snowy Hydro’s ability to secure future contractors for the project.
Rather than proceed with termination, Snowy Hydro’s board directed new CEO Dennis Barnes in May 2023 to settle outstanding COVID claims and renegotiate the fixed-price contract with FGJV. Negotiations took three months and included more than 60 meetings, though no formal minutes were maintained. According to Snowy Hydro, this approach has allowed the parties to manage cost pressures while maintaining project continuity.
The ongoing dispute has drawn broader public and political attention. In June 2026, a critical report from the Australian National Audit Office assessed Snowy Hydro’s contract management unfavorably, while political figures such as Pauline Hanson have called for the project’s cancellation, labeling it a “black hole of debt” for taxpayers. Analysts have pointed to the project’s total costs—estimated at $42 billion when including transmission infrastructure—and several have advocated for a royal commission to investigate what some describe as one of Australia’s largest infrastructure failures.
A parliamentary committee led by Labor MP Josh Burns is currently undertaking a comprehensive review of Snowy 2.0’s cost forecasting, governance, management, and contractor oversight. Meanwhile, Snowy Hydro continues to collaborate with the federal government on a detailed cost reassessment, with Energy Minister Chris Bowen expected to release the findings publicly once received.
Despite the disputes and budget challenges, Snowy Hydro’s CEO Dennis Barnes indicated in June that the contractor consortium, headed by Webuild, likely remains profitable. This ongoing difference over who should bear the brunt of further cost increases continues to fuel tensions as the project progresses toward its revised milestones.