Cost of Major Australian Hydro Project Balloons to $23 Billion from $2 Billion

Snowy 2.0 pumped hydro project in New South Wales' Kosciuszko National Park, Australia in this undated photo. New South Wales Department of Planning, Industry and Environment

The cost of Australia’s Snowy Mountains Hydroelectric Scheme, or Snowy 2.0, could blow out by an additional $23 billion (US $16.1 billion) on top of its original estimated $2 billion price tag from nearly 10 years ago.

The Department of Energy lists the Snowy 2.0 project as an expansion of the original Snowy Mountains Hydroelectric Scheme, which is expected to add 2,200 mega watts of electricity generation capacity, and 350,000 mega watt hours of storage.

The 2026 Snowy 2.0 Cost Reassessment for 2026 revealed, however, that the target cost had crept to $22.2 billion, with an allowance for $25 billion.

The project, announced in 2017 under the Turnbull Liberal government, is now expected to be completed in late 2029, a year later than originally announced.

Pumped hydro schemes operate like a giant battery. Water is stored in an upper reservoir and released, which turns turbines to generate electricity that also charges large batteries. The water can later be pumped back up the reservoir and released again, with the cycle ongoing whenever power is needed.

Machine tunnelling for the Snowy 2.0 is 65 percent complete, while cavern excavation is 90 percent complete.

Snowy Hydro CEO Dennis Barnes said the higher cost estimate is the result of the project’s “uniqueness, risk and technical complexity,” but claimed the bill could have risen had it not been for mitigating action.

“I have no doubt that moving from a fixed price contract, which was never suitable for such scale, uniqueness and complexity, has protected the project from an even greater cost increase,” he said in a statement.

“It’s also likely that under a fixed price contract, the project would again be stopped under the weight of billions of dollars of claims from the contractor, as it was prior to the reset.”

Barnes claims analysis shows the project will add $18.3 billion into the economy and will reduce wholesale power prices by more than $7 billion to 2075.

“The scale of Snowy 2.0’s energy storage is world-leading. More than half of the total energy storage the grid needs by 2050 will come from Snowy 2.0 alone,” he said.

“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.”

But news of the cost blow-out has been met with criticism by some, including the executive director of the Australian Institute for Progress, Graham Young, who says the project should be cancelled due to its sheer scale.

“A rational investor would definitely be reassessing their commitment to it,” he told The Epoch Times.

“But if you were rational you wouldn’t be trying to build an electricity network this way.

“And politicians are particularly prone to the sunk cost fallacy [where a project is continued because substantial money has already been poured into it] … and it is an iron law of politics that politicians never admit to being wrong, let alone measuring the size of the mistake.”