Australia’s largest hydropower project pushed back two years

Snowy Hydro, the Australian government-owned company behind the country's largest pumped hydro project, has deferred the facility's opening to December 2028. 

The Snowy 2.0 pumped storage hydro project in the Snowy Mountains of New South Wales is expected to generate 2GW of renewable energy, and provide about 350,000MWh of large-scale storage to the national electricity market to help back up a system increasingly dominated by solar and wind energy.

The finished project would pump water to the highest reservoir in a linked system during periods of cheap electricity and release it when required.

The project is expected to cost A$5bn (£2.6bn), although the company has warned there are likely to be cost overruns. The full commercial operation of all the units is anticipated by December 2029.

The delays in the construction of the project have been blamed on a shortage of skilled workers, complex designs, soft ground and supply chain disruptions. The announcement follows a series of challenges that the company has faced during construction, including a tunnel-boring machine becoming stuck about 70 metres below the surface, the collapse of one of the project’s contractors, as well as the Covid-19 pandemic.  

In a statement on Wednesday, the federal government-owned company said its management team was “working towards resetting the delivery timeline and budget” for the pumped hydro project.

Snowy Hydro’s new chief executive, Dennis Barnes has stressed that the project is "critically important to the transition of Australia’s electricity grid", and so the company is required to work "to a safe, efficient and realistically achievable timeframe to enable orderly planning for all our stakeholders".   

"I am committed to being transparent about our progress and how we are proactively managing the inevitable issues and challenges that arise in a complex project like this," he added. “While many other major infrastructure projects have been impacted by the same challenges, Snowy 2.0 continues to make positive progress."

The executive also stressed that the project is providing “significant employment and economic benefits" to the Australian population, with over 2,400 people currently working full-time in bringing Snowy 2.0 to fruition. 

Snowy 2.0 will connect the Tantangara and Talbingo dams through 27km of tunnels and see the construction of a new underground power station. Water from the lower dam will be pumped to the upper dam when there is excess renewable energy and will be released back to the lower dam to generate electricity when there is high demand.

The Australian government had originally hoped Snowy 2.0 would be built by 2021. However, that deadline was later pushed to 2026, and now, to 2028. 

The hydro power project was designed to allow the country's east coast to obtain 82 per cent of its power from renewables by 2030, up from 30 per cent now. The power produced by Snowy 2.0 will also be vital to help replace capacity from three coal-fired power stations due to close by 2028.

The project is one of the largest renewable energy and storage projects in Australia. However, its delays have raised concerns about whether the giant Eraring coal plant in New South Wales should have its life extended beyond its scheduled closure in August 2025.

“The delay of Snowy Hydro by two years is an impediment to making sure that we’ve got an efficient dispatchable supply of power [as] we work our way through the renewable energy revolution,” said Chris Minns, the New South Wales premier. “It’s a difficult transition. We’ve never pretended anything otherwise.

“It’s one of the leading reasons why, during the election campaign, we kept the door open to ensuring that Eraring is available to the consumers of energy in NSW. Everybody’s got an interest in keeping the lights on. We’ve made it clear that’s a priority for us.”

Snowy Hydro said it expected further details on the cost of the “project reset” would be known by about July.