Snowy 2.0 Costs Have Soared Above $20 Billion

Snowy Hydro has signalled that costs for the major pumped hydro project are expected to exceed $20 billion.

Updated on Oct. 13, 2026 in Utilities

Isometric editorial illustration of a concrete hydroelectric turbine structure set within a stylized rugged mountain landscape, representing large-scale energy infrastructure. — Snowy Hydro has updated the estimated cost for the Snowy 2.0 pumped hydro project, with total expenditures expected to exceed $20 billion. AI Illustration. Upload story photo >

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Should the government continue funding large-scale infrastructure projects if costs significantly exceed the original budget estimates?

Snowy Hydro has prepared a new cost update for the Snowy 2.0 project, with expectations that total expenditure will climb past $20 billion. The project, which aims to provide 160 hours of grid backup, currently sits at a $12 billion listed cost.

Why it matters

Significant cost overruns and potential gas supply issues at the Kurri Kurri plant have raised concerns regarding Australia's grid infrastructure. Market signals currently struggle to trigger necessary new projects, complicating long-term planning for energy security.

The Snowy 2.0 project, which boasts an expected asset life of 150 years, is now projected to cost over $20 billion. This estimate represents a significant increase over the $12 billion figure previously listed.

The players

Snowy Hydro

This government-owned corporation is responsible for the development and management of major pumped hydro and thermal assets in Australia.

The details

Snowy Hydro faces potential gas supply interruptions at its 660-megawatt Kurri Kurri gas plant, forcing the utility to consider logistics like diesel truck deliveries. During the 2022 national electricity market crisis, thermal assets operated at a 37 percent capacity factor for eight weeks, highlighting the volatility of existing grid support.

2022 saw the occurrence of a significant national electricity market crisis.
October 2026 marked the one-year anniversary of the internal Snowy 2.0 project review.
13 October 2026 was the date the COO discussed these rising project costs at a summit in Sydney.
End of 2028 is the projected completion date for the Snowy 2.0 infrastructure.

Market Landscape

The challenges surrounding Snowy 2.0 underscore broader structural weaknesses within the National Electricity Market, where current spot price mechanisms often fail to incentivize necessary infrastructure investment. This project marks a significant effort to bridge capacity gaps that traditional market signals have thus far been unable to address.

The rising costs of major energy infrastructure projects may ultimately influence future electricity pricing structures for households and businesses across the country. Additionally, potential supply chain issues at plants like Kurri Kurri could impact local grid stability during peak demand periods.

The takeaway

Large-scale energy projects in Australia are facing ballooning costs that far outpace initial budget estimations. Maintaining a diversified grid remains a complex challenge for utilities when balancing ageing thermal assets with long-term infrastructure construction.