Snowy 2.0 blows out by more than $3m a day. Will it ever be worth it?

Billions over budget and years late, how Snowy 2.0 got hereBy Jacinta Counihan and Tim FernandezABC South East NSW Link copiedShareShare articleDeep under the Snowy Mountains, tunnelling machines have pierced through a key stretch of rock, edging Australia's most expensive energy project one step closer to completion. The way is now cleared for work to begin on the Snowy 2.0 power station itself. But questions remain about whether it will ever justify its cost. The project in the NSW Kosciuszko National Park is seven years behind schedule, and its initial budget of $2 billion looks quaint in hindsight. Based on Snowy Hydro's most recent costings of $12 billion, the project has blown out by around $3 million a day. The government-owned energy company has admitted the final price tag will be much higher. Snowy 2.0 has also faced scrutiny over ongoing safety issues and the revelation that executives collected more than $1.2 million in bonuses despite missing financial targets. In May, Snowy Hydro chief executive Dennis Barnes acknowledged the project's difficulties but stood by its importance. Dennis Barnes says the unprecedented scale and complexity of Snowy 2.0 have contributed to the project's rising costs. (ABC South East NSW: Isla Evans) "Like most mega-projects in Australia and globally, Snowy 2.0's cost has increased; Snowy 2.0's scale and uniqueness have compounded the increase," he said. Australia's most ambitious renewable energy project is slowly nearing completion. (ABC South East NSW: Floss Adams) Snowy 2.0 was announced in 2017 by former prime minister Malcolm Turnbull. It is an expansion of the Snowy Mountains hydro-electric scheme that was completed in 1974 at a cost of $820 million. Adjusting for inflation, that figure would be more than $8.5 billion today. Snowy 2.0 is expected to be completed by the end of 2028. (ABC South East NSW: Isla Evans) The project will connect two existing reservoirs at Tantangara and Talbingo via a 27-kilometre underground tunnel system and act like a giant battery. Excess wind and solar energy will be used to power reversible turbines that will pump water from Talbingo via a hydro-electric power station 800 metres underground to the higher-elevation reservoir at Tantangara. When demand surges, water will then be released back down the hill, generating electricity. Upon completion, the pumped hydro power station will produce 2.2 gigawatts of power at full capacity, which Snowy Hydro claims is enough to power 3 million homes for a week. Electricity will be generated at a hydro-electric power station being constructed about 800 metres underground. (ABC South East NSW: Isla Evans) Just months after the project was announced, a feasibility study revealed costs had more than doubled to $4.5 billion. In 2018, the federal government bought the New South Wales and Victorian governments' stakes in Snowy Hydro Limited for $6 billion, so when early works began in 2019, it was entirely Commonwealth-owned. In April that year, Perth-based construction company Clough and its Italian joint venture partner, Salini Impregilo, were awarded the major works contract valued $5.1 billion. They would go on to form Future Generation Joint Venture (FGJV), which would be responsible for the project's construction. A number of safety incidents have occurred including a tunnel collapse, toxic gas leak and a worker hit by an excavator boom. (ABC South East NSW: Floss Adams) The Black Summer bushfires and COVID-19 caused unexpected delays less than a year into construction. From 2021, three tunnel boring machines (TBMs) were deployed to carve out the tunnel network. The first two TBMs, named Lady Eileen Hudson and Kirsten, completed the main access and emergency escape and ventilation tunnels with few issues. But the third machine, Florence, had troubles from the start. In February 2023, Florence became stuck after hitting soft ground just 150 metres into the excavation of a 15-kilometre tunnel linking Tantangara Reservoir to the underground power station site at Lobs Hole. The ground above collapsed, creating a sinkhole, and Florence was stuck for roughly 11 months. TBM Florence became stuck for almost a year but is now almost halfway through its 15-kilometre journey. (Supplied: Snowy Hydro Ltd) During this time, there were also leadership troubles, with chief executive and managing director of Snowy Hydro Paul Broad resigning in June 2022. At the end of the year, Clough had collapsed and its Australian business was bought out by Salini Impregilo, which had rebranded to WeBuild. Despite these setbacks, the project received a glowing review from the Australian National Audit Office (ANAO) in 2022. It stated that Snowy Hydro's governance of the early implementation of the project was "effective" and the report had no recommendations. At that time, the project was on track to be finished by 2026–27. An underground construction site in a section of the 27-kilome

Snowy 2.0 blows out by more than $3m a day. Will it ever be worth it?

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