“Reset 3.0” doesn’t answer the biggest questions about Snowy’s $25 billion-plus pumped hydro gamble

Snowy Hydro has reset Snowy 2.0's cost to as much as $25 billion, up from $12 billion at the 2023 reset and $2 billion when the project was announced in 2017. The latest review, released Thursday, omitted the net present value calculation that had shown $3 billion in 2024. Instead, Snowy's chief executive highlighted $18.3 billion in economic activity and a forecast $7 billion reduction in wholesale electricity prices to 2075. The choice of 2075 as the calculation horizon is unexplained. The project remains a 2.2 gigawatt pumped hydro scheme connecting two reservoirs through 27 kilometres of tunnels and building an underground power station.

Where this fits

Snowy 2.0 exemplifies the whole-system cost problem in a renewables-dependent grid. Pumped hydro is firm, dispatchable power. It is also capital-intensive and time-consuming to build. As cost blowouts compound and completion stretches, the economic case for the project weakens on its face, yet it is being funded because intermittent solar and wind cannot deliver firm power alone. The vanishing NPV and the resort to indirect economic measures (jobs, wholesale price savings) signal the project no longer justifies itself on energy economics. A nuclear plant would deliver the same firming role at lower whole-system cost and in a fraction of the time, but Australia's regulatory framework bans it.

What it means

Australia is locking in a grid design that is both expensive and dependent on storage infrastructure with uncertain economics. Snowy 2.0 is now a $25 billion-plus bet on a single site. If that bet fails to deliver the promised price reductions or reliability gains, there is no reserve capacity to backfill the system. Meanwhile, gas will remain the backup for the years Snowy remains incomplete, and the bill for firming infrastructure will keep climbing.