Snowy Hydro 2.0 has blown out to 12 times its original cost – but the CEO says it ‘could have been worse’ - The Guardian

Snowy Hydro 2.0, the pumped-hydro storage scheme intended to firm renewable output across the National Electricity Market, has ballooned in cost to about $16 billion from its original $1.3 billion estimate. The CEO of Snowy Hydro stated the outcome "could have been worse" despite the twelvefold overrun, citing geotechnical challenges, inflation and labour costs. The project remains under construction with no completion date firmed in the public domain.

Where this fits

Snowy 2.0 is the flagship firming asset for a renewables-heavy grid. Its cost spiral is a direct data point on the whole-system cost of a weather-dependent electricity transition. The scheme was greenlit as the solution to hours of low solar and wind output, yet the bill for that solution has grown an order of magnitude. This is not a one-off project mishap: it is evidence that the infrastructure required to make renewables reliable is far more expensive than the renewable generators themselves, and that cost forecasting in this space is routinely optimistic by years and billions of dollars.

What it means

Australia is committing to a grid firmed by gas peaking plants and pumped hydro, both now proven far costlier to build and operate than early modelling suggested. The delay and expense mean more years of reliance on gas as the only proven firm supply, locking in fuel cost exposure and carbon lock-in through the 2030s. A firm, dispatchable, low-material alternative, nuclear generation, remains banned by law, foreclosing the option that could have delivered reliable, low-emission power without the geotechnical and construction risk now visible in Snowy's history.