Snowy 2.0 hydropower contracts to be restructured as costs soar

afr.com:

Snowy Hydro’s review of its troubled Snowy 2.0 pumped hydro storage project is close to being completed as the federal government recalculates costs, which are expected to rise well above the previous forecast of $5.9 billion to around $10 billion.

The taxpayer-funded project to link two dams through 27 kilometres of tunnels and a new underground power station was forecast to cost around $4.5 billion and be operational by late 2024 when construction contracts were awarded in 2019.

But costs have soared due to inflation in wages and construction materials over the past few years, and difficulties tunnelling and getting workers during the COVID-19 pandemic. One of the companies building Snowy 2.0, Clough, collapsed in December.

The forecast cost of Snowy 2.0 could rise to around $10 billion Jamila Toderas

The date on which Snowy 2.0 will start generating power has also been delayed by several years, with Snowy Hydro warning in May that Snowy 2.0 would not be operational until late 2027 at the earliest, and potentially as late as December 2028.

The federal government has argued that Snowy 2.0 is critical to help secure energy for Australians as coal power plants shut down.

But the new transmission needed to fully connect Snowy 2.0 to the rest of the power grid is also being developed more slowly than anticipated, raising questions about the economic viability of the hydropower project despite the urgent need for more long-duration storage in the energy grid.

Snowy 2.0’s delays have also increased scrutiny on the ability of the national power grid to withstand the exit of coal power plants from the system over the next few years, given the critical role the hydropower plant is supposed to play in backing up weather-dependent