Australia's Snowy Hydro 2.0 cost could reach $18 billion, review finds

what happened

A review published on Friday by government-owned Snowy Hydro estimates the project could cost as much as A$25 billion (about $18 billion), roughly 12 times the original estimate. Completion may now slip to the end of the decade. The initial budget was A$2 billion when the project was announced in 2017, and it was raised to A$12 billion in 2023 with a 2028 target.

The station is designed to add 2,000 megawatts of capacity and help replace coal-fired power by pumping water uphill when power is cheap and releasing it to generate electricity at peak times. Construction has been hit by a ground collapse during tunnelling and problems with contractors. Energy and Finance Ministers Chris Bowen and Katy Gallagher said the government remains committed to finishing it, citing "significant geological challenges."

why it matters

For markets, the timing matters as much as the price tag: a delay slows the arrival of reliable storage on a grid that depends more on renewables. The higher cost also adds pressure on Australia's public finances.

market impact

Australian power: higher costs and delays to storage raise grid and budget risks

tags

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