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Snowy Hydro 2.0: Cost Estimates Balloon to $42 Billion Amid Delays and Audits

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Snowy Hydro 2.0: A Project in Perpetual Crisis

Once billed as a $2 billion energy solution, Australia's largest pumped-hydro project is now estimated to cost $42 billion—with no end in sight.

Project History and Schedule

Announced in 2017 by then-Prime Minister Malcolm Turnbull, Snowy Hydro 2.0 is designed to connect the Tantangara Dam and Talbingo Reservoir via a 27-kilometer tunnel system, with a power station located 800 meters underground. The facility is intended to store energy from wind and solar sources and supply up to 2,200 megawatts to the national grid.

The timeline of cost and schedule revisions tells a stark story:

  • 2017: Initial cost estimated at $2 billion. Target completion: 2021.
  • Post-2017 feasibility study: Cost revised to $4.5–$6 billion.
  • August 2023: Budget reset to $12 billion. Completion extended to December 2028.
  • October 2025: Snowy Hydro confirms additional funding is needed, initiating a new cost reassessment by independent experts.
  • Current status: The project is reported to be approximately 70% complete. CEO Dennis Barnes stated in early 2025 that the revised 2028 launch date is "not feeling comfortable."

Cost Estimates: The Widening Gap

Official Figures

The Australian government's budget lists the project at $8.3 billion. Snowy Hydro has confirmed costs have exceeded the $12 billion budget set in 2023 but has declined to provide a current specific estimate, citing commercial sensitivity and ongoing contractor negotiations.

Independent Analyses

Energy analyst Bruce Mountain (Victoria Energy Policy Centre) and energy executive Ted Woodley estimate the total cost at approximately $42 billion:

  • $20 billion in direct construction costs
  • $12 billion in transmission line infrastructure (including Humelink, VNI West, and Western Renewables Link)
  • $8 billion in interest charges over 15 years

Woodley noted that every year of delay adds approximately $1 billion in interest. His previous estimate in October 2025 was $30 billion.

Snowy Hydro has stated the published $42 billion figures are unsubstantiated and that the company is not responsible for transmission costs.

Audits and Management Failures

The Australian National Audit Office (ANAO) conducted a second audit, finding management to be "partly effective" since the 2023 reset. Specific findings include:

  • No reliable system to track future costs
  • No agreed baseline schedule for completion
  • Ineffective contractor accountability
  • Absence of quality data for monitoring
  • Productivity gains expected after the reset have not been achieved

A new ANAO audit on value for money is expected in early 2026.

Snowy Hydro agreed to four of five audit recommendations, including strengthening contractor management; it partially agreed to publicly publishing progress against targets.

Technical and Construction Challenges

Geological Nightmares

The Snowy Mountains region presents complex rock formations, faults, fissures, and varying rock density for the 29 km feeder tunnel.

Tunnel Boring Machine Problems

  • TBM "Florence" became stuck in February 2023 after encountering soft ground, creating a sinkhole. It remained stuck for approximately 11 months.
  • A fourth TBM named "Monica" was acquired at a cost of approximately $75 million. It is designed to navigate complex geological conditions and was scheduled to begin operations on February 19.

Safety Incidents

  • Tunnel collapse
  • Toxic gas leak (July 2023)
  • Ventilation fan implosion (February 2025)
  • Worker struck by excavator boom (January 2026)
  • Truck near a cliff (January 2025)
  • Concrete testing lab closed due to silica exposure concerns (July 2025)

Workforce and Leadership

  • Snowy Hydro 2.0 currently employs approximately 5,500 people (up from 3,000 originally budgeted), with average annual wages of $250,000.
  • CEO Paul Broad resigned in June 2022.
  • Construction company Clough collapsed in 2022; its Australian business was bought by joint venture partner Salini Impregilo (now WeBuild).
  • In May 2025, workers went on strike over pay.
  • Current CEO Dennis Barnes received a $323,000 bonus in 2025; over $1.2 million in executive bonuses were awarded despite missing financial targets.

Political Blame Game

Coalition Government

Shadow Energy Minister Dan Tehan described the ANAO findings as "deeply concerning" and called for a pause and review of the project and its contracting arrangements. Former CEO Paul Broad attributed cost blowouts to Energy Minister Chris Bowen, stating that in 2023 the contract was renegotiated from fixed-price to cost-plus with contractor Webuild.

Labor Government

Energy Minister Chris Bowen's spokesperson called the recommendations "sensible" and expressed support for the project. The statement criticized the previous Coalition government for ignoring cost warnings as early as January 2020.

Other Political Figures

  • Senator Pauline Hanson called for the project to be scrapped, describing it as a "blackhole of debt for taxpayers."
  • Former ACTU President and federal Labor MP Jennie George criticized the government for hiding the true cost through off-budget accounting.

Expert Opinions: A House Divided

Critics Argue:

  • The project has crowded out other investment, leaving the market short of capacity after delays, resulting in higher costs and reduced grid reliability.
  • Interest costs have been ignored, and the government is financing the project through equity and loans.
  • Battery technology advancements have made pumped hydro uneconomic for shorter durations.
  • Engineer David Osmond's simulations suggest that with 24 GW and 125 GWh of short-term storage, Australia's main grid could achieve 98.5% renewable electricity, reducing the need for Snowy 2.0.

Supporters Argue:

  • Professor Andrew Blakers (ANU) stated the project is "world-class" for energy storage and will help lower electricity prices by competing with fossil fuels.
  • CEO Dennis Barnes described Snowy 2.0 as "indispensable" for long-duration storage during periods of low wind and solar generation.

Both sides generally agree that batteries and pumped hydro serve complementary roles in the energy grid.

Financial Outlook

  • In March, S&P Global Ratings warned it might downgrade some Snowy Hydro debt due to delays and cost blowouts.
  • The Australian government is expediting funding, with $2.9 billion in loans planned for 2026–27.
  • Nexa Advisory CEO Stephanie Bashir stated it is too late to cancel Snowy 2.0 but suggested it should serve as a lesson for other major infrastructure projects, emphasizing the need for proper planning and business cases upfront.