Still in the dark: Snowy Hydro’s awkward anniversary marked without promised review of Snowy 2 costings

It’s been a full year, come Saturday, since Snowy Hydro announced it had directed its principal contractor on its giant Snowy 2.0 pumped hydro project “to undertake a comprehensive line-by-line reassessment” of the delivery costs.

The review was supposed to have taken nine months, which implied Snowy Hydro would have completed it well before now, and handed it over to the Albanese government months ago.

So, how is it going? “Snowy continues to work closely with its shareholder on the Snowy 2.0 cost reassessment,” a spokesperson for the federal government-owned corporation tells Renew Economy.

By synchronicity or simpatico, a spokesperson for climate change and energy, Chris Bowen, tells us: “The Government continues to work closely with Snowy Hydro on the Snowy 2.0 cost reassessment.”

If there’s a light at the end of this literal tunnel, it’s not yet evident to the public – who will ultimately hold both Snowy and the government accountable.

And the longer the public is left in the dark, the more doubts will grow about the project’s gargantuan costs. Officially “reset” at $12 billion in 2023 by Snowy Hydro, the final bill might end up being revised to $20b or more.

More on the costs shortly, but the likely completion date is stirring worries of their own. In announcing the review a year ago, Snowy boldly headlined its media release, “Cost Reassessment Underway for On-schedule Snowy 2.0”.

The projected completion date remains the end of 2028, timing that the latest Integrated System Plan by the Australian Energy Market Operator dutifully recorded, in June.

That’s less than 27 months away. And progress does appear, let’s say, ambiguous.

“At 67% complete, Snowy Hydro believes material cost pressures mean now is the time to oversee [principal contractor Future Generation Joint Venture] as it carries out the cost reassessment which is expected to take up to nine months to complete,” Snowy said last October. 

And one year on, Snowy told Renew Economy, “Snowy 2.0’s four tunnel boring machines have completed 65% of the 27 kilometres they must excavate.”

Not quite like for like since tunnels, of course, aren’t the end of the work. But it does mean Snowy Hydro has less than three years to finish about a third of the tunnels.

Of the four tunnel boring machines, the one dubbed Kirsten is now in the second half of its drive in the project’s inclined pressure shaft, which connects the underground power station with the headrace tunnel.

The second, “Lady Eileen Hudson”, is now being prepared to be disassembled after completing its second tunnel on the project.

The third, and somewhat troubled, 2400-tonne Florence is now undergoing “scheduled maintenance” to prepare it for “the remainder of its excavation journey”, Renew Economy understands.

That maintenance began in mid-July and is expected to conclude by mid-October, after which tunnelling will resume. Work crews have had to excavate a small cavern at the front of the machine “to allow for refurbishment works on its cutterhead”.

It has completed just under half – at 49% – of its journey in the project’s headrace tunnel.

The final borer, dubbed Monica, was a $75m late addition to help speed up the tunnelling, and requires regular maintenance stops to ensure peak performance.

In particular, Monica has been designed to tackle the Long Plain Fault Zone, a complex patch of fractured ground that stretches about 250km from Victoria into NSW.

Dave Evans, 2.0’s project director, told your correspondent here in early 2020 that while the fault was “nothing like” the soft earth that stalled Florence near Tantangara Dam, geologists anticipate a challenging zone of at least 500 metres to get through.

Ted Woodley, a former energy executive who has been a prominent critic of Snowy 2.0 since its inception, says Snowy Hydro spent about $100 million on exploratory work for a project that has a 27-kilometre main tunnel and a myriad of other works.

At the “reset”, both the company and Bowen conceded those preparations had been insufficient, he said.

Woodley said the principal contractor, FGJV, should have been able come up costings sooner than now. Snowy Hydro should be able to say how much they have spent and how much funding they have left.

“I think it’ll be more than $20 billion,” he said. And that excludes many other costs, including transmission to get the additional power to Sydney and to Victoria, the environmental damage to the Kosciuszko National Park, and an interest bill that could amount to $1b a year.

“It’s a ginormous project, it’s extremely complex, extremely difficult, with lots of risks,” he said.

“The value has been overstated throughout the project,” Woodley said, adding it might be more economic to stop it rather than complete it, particularly as the rise of utility scale batteries remove much of the need for a venture of Snowy 2.0’s scale.

The intention, he said, was to run Snowy 2.0’s six units almost every hour – either to pump water up to Tantangara or to generate power as it ran down to Talbingo Dam.

Instead, Snowy 2.0 might “only get a look-in” during the few times a year when there has been little sun or wind for a few days”, Woodley said.

The federal Coalition’s ability to criticise the project is somewhat hamstrung. After all, it was the Opposition’s present leader, Angus Taylor, who gave the project its “historic” approval in February 2018, when he was minister for industry, energy and emissions reduction.

“Following Snowy Hydro Board’s final investment decision on 12 December 2018, the Government has reviewed the project’s business case and is satisfied that the project stacks up and will benefit energy consumers and the Snowy Mountains region,” Taylor said at the time.

Woodley said he had written to Bowen when the Albanese government came to office in May 2022, urging the new minister to conduct an independent review.

“We told him ‘we believe it’ll be a noose around your neck,'” he recounted this week, adding that Bowen replied saying he was confident it would be a great project.

“Both major parties are wedded to the project,” Woodley said.

So, it seems, is AEMO, which continues to bank on Snowy 2.0’s long-duration storage to support the grid.

As AEMO states in its latest ISP, “Snowy 2.0 stores up to 350 gigawatt-hours of water that would enable full output for a week if discharging at its maximum rate.”

“This would be over half the NEM’s energy storage capacity in 2050 and enough to meet the average needs of around 3m households (about as many as in Sydney and Melbourne combined),” it said.

Just how that benefit stacks up against the revised costs, we’ll all have to wait a bit longer.

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