Australia’s 2.2 GW/350 GWh Snowy 2.0 pumped-storage hydroelectricity project is now expected to cost between AUD 22.5 billion and AUD 25 billion through to commissioning in 2029, according to an updated cost and schedule estimate from principal contractor Future Generation Joint Venture (FGJV).
The project was initially estimated to cost AUD 2 billion when announced in early 2017. That figure was revised to AUD 3.8 billion to AUD 4.5 billion later that year, AUD 6.1 billion in 2018 and AUD 12 billion in 2023.
The update attributes the cost increase largely to FGJV’s underestimation of the delivery scope, including cost and planning underperformance, and the contractor’s failure to meet productivity targets because of construction complexities. It also cites a design revamp involving detailed technical analysis, and external factors such as global cost increases for equipment, services and labor that exceeded the allowances made at a 2023 contract reset.
Snowy Hydro CEO Dennis Barnes said the cost increase is disappointing, but that because the project is no longer on a fixed-price contract, it is no longer exposed to the “weight of billions of dollars in claims from the contractor.”
The 2023 contract reset included mechanisms to support FGJV’s cost and program management on the project, which has more than 5,000 workers. These included directing FGJV to set up a project control office, now operational, that uses enhanced data and analytics to drive productivity and identify emerging risks early.
“Like the original Snowy Scheme, which still underpins energy reliability more than 70 years on, Snowy 2.0 is a generational investment in our energy sovereignty and a national asset owned by all Australians,” Barnes said. “Snowy 2.0’s massive, long-duration storage will be the grid’s insurance policy against multi-day wind and solar droughts, helping to prevent blackouts and control price spikes that would otherwise flow through to household electricity bills.”
Snowy 2.0, regarded as Australia’s largest energy security project, will provide long-duration energy storage equivalent to approximately 26 million home batteries, or enough to power 3 million homes for a week, according to Snowy Hydro.
The project is transitioning from cavern excavation and machine tunneling, which are 90% and 65% complete, respectively, to the physical assembly of the large-scale underground power station.
All six reversible turbines have arrived in Australia. They were manufactured by Germany-based Voith Hydro, with bespoke components fabricated at its facility in Shanghai.
The underground powerhouse complex is a network of caverns about 1 km below ground, which Snowy Hydro said is comparable in scale to the Sydney Opera House. It estimates the complex will last 150 years, until 2176.
In the next phase, crews will install inlet valves, spiral casings, high-voltage transformers weighing more than 400 metric tons each and other hydropower components.
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