Cost reassessment underway for $12b Snowy 2.0

Snowy Hydro has ordered the comprehensive review of its Snowy 2.0 pumped hydro project in NSW currently undergoing development.

Due to current material cost pressures, the company has engaged independent construction cost experts to verify the principal contractor Future Generation Joint Venture’s (FGJV) line-by-line reassessment.

Snowy Hydro chief executive Dennis Barnes says the renewable energy project has made good progress since its reset in 2023 and the need to reassess is disappointing as the critical importance of the project to electricity users across the network has not changed.

“Despite disruption, including work stoppages due to safety concerns and continuing challenges with geology, we’ve been able to recover that time and get us to where we need to be in terms of schedule,” he said.

“The reset was about getting Snowy 2.0 moving again by creating a more collaborative relationship with the principal contractor and achieving safe progress. We’ve done both, but the productivity uplift hasn’t been to the degree we needed.”

While the 2023 reset succeeded in substantially increasing productivity, there remain challenges due to a combination of factors, including delays from stoppages associated with safety concerns and general productivity underperformance leading to unexpected cost pressure.

Unforeseen supply chain cost increases are another significant source of cost pressure for the project attributed to bespoke procurement, including major offshore purchases associated with Snowy 2.0’s underground power station.

Costs of de-risking challenging geology have also exceeded expected figures with the initial assessment indicating that the cost to purchase, deploy and operate would be covered within the project costs, however cost pressures have meant this is no longer possible.

The project is currently Australia’s largest committed renewable energy project and is expected to underpin the country’s secure and stable transition to a low-carbon emissions future at a lower cost for consumers.

“Snowy 2.0 is being built to operate for 150 years. It is as important to Australia now as the original Snowy Scheme was decades ago,” Mr Barnes said.

“Snowy 2.0 will be a cornerstone of Australia’s transition to renewable energy, providing more than half of the long-duration storage the grid needs by 2050.

“Like the original scheme, which still helps underpin electricity reliability today, the benefits of Snowy 2.0 will be felt for generations.”