Why The Snowy Hydro 2.0 Cannot Be Stopped Despite Cost Blowout
By Steven Tripp
When former Prime Minister Malcolm Turnbull announced Snowy Hydro 2.0 in 2017, it was billed as a straightforward expansion of Australia’s iconic hydroelectric scheme. The pumped-hydro project would cost around $2 billion, deliver 2,000 MW of capacity, and be operational by 2021, providing vital storage for the emerging renewable energy grid.
Nearly a decade later, the project is a stark example of one of Australia’s biggest infrastructure miscalculations.
Recent independent analysis by economist Dr Bruce Mountain of the Victoria Energy Policy Centre and former energy executive Ted Woodley now estimates the total cost at $42 billion. This figure includes approximately $20 billion in direct construction costs, $12 billion for associated transmission infrastructure (such as HumeLink and VNI West), and $8 billion in interest charges over the 15-year build time.
According to Woodley, the current scheduled completion date of December 2028 may now slip to 2032, further adding to the cost.
Calling for a Royal Commission, Dr Mountain said, “Snowy 2.0 is, and always was, a dreadful idea”.
Despite the ballooning price tag, cancellation appears politically impossible. The Net Zero rollout requires an over-build of wind and solar projects to accommodate for the lack of energy production when the wind is not blowing, and the sun is not shining.
When wind and sun is available however, the surge of electricity into the grid is far beyond what is required, thus the need for it to be stored. Battery technology, while growing rapidly, remains expensive for the scale and duration required to avoid blackouts.
Snowy 2.0 is designed as a colossal battery, providing 350 GWh of energy storage — which the Australian Energy Market Operator (AEMO) says is more than half of the dispatchable energy storage that the National Electricity Market (NEW) will need to reach net zero by 2050.
Thus, Snowy 2.0’s pumped-hydro capacity is essential to the whole Net Zero rollout. The lack of immediate large-scale alternatives means that without Snowy 2.0, Net Zero would fail. This essentially locks the project in, despite the ever-ballooning costs to the taxpayer.
Proponents argue that once operational, Snowy 2.0’s 150-year design life will deliver long-term value. Detractors counter that taxpayers will foot the bill and be burdened with higher electricity prices, subsidies and increased taxes.
Either way, Snowy Hydro 2.0 has become ‘too big to fail’ — a cornerstone of the renewable rollout that politicians cannot easily walk away from, regardless of the final bill.
By Steven Tripp