Snowy Hydro confirms Snowy 2.0 cost blowout to $12b
Snowy Hydro has confirmed the blowout in the cost of its Snowy 2.0 pumped hydro storage project to $12 billion, while its Kurri Kurri gas power plant cost has surged to $950 million.
The federal government-owned generator said the troubled Snowy 2.0 venture, which has suffered delays and cost surges through the pandemic as well as technical difficulties in construction, “remains value accretive” despite the more-than-doubling of the budget.
The Snowy 2.0 project has been mired in construction difficulties, budget and completion date delays. Jamila Toderas
The Kurri Kurri generator also “remains economically viable on a forward-looking basis”, Snowy Hydro said in a statement on Thursday, pointing to the value of its “firming” capacity to support weather-dependent wind and solar power.
The news of the cost overruns comes after Snowy flagged earlier this year it was reviewing the budget and schedules for the projects, which are both needed to underpin the transition to low-carbon energy.
Climate Change and Energy Minister Chris Bowen said on Wednesday the project was “vital” for the eastern states power grid.
Chief executive Dennis Barnes said on Thursday he was “committed to ensuring these critically important projects are transparent and are placed on a robust and sustainable footing”.
Snowy reset the target date for full start-up of Snowy 2.0 to December 2028, towards the earlier end of a range given earlier this year. It said its original construction contract with main contractor Future Generation was “no longer fit for purpose” and it had moved to a different structure, involving an “incentivised target cost contract” model.
The maximum power of the storage project is meanwhile being increased by 10 per cent, to 2200
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