Snowy Hydro has unveiled a new completion date of December 2028 and a revised total cost of $12 billion for its flagship project, Snowy 2.0, following an extensive review and reset process.
In a statement, the company said that as of June 2023, $4.3 billion had already been invested in the project, with approximately 80% of these funds contributing to the Australian economy. It also said that first power generation from the project is now slated for the second half of 2027, with a subsequent target date for full commercial operation of all units set for December 2028.
One of the key changes included in the reset is a shift from the fixed-price Engineering, Procurement, and Construction (EPC) Contract to an incentivized target cost contract model. This transition is being carried out in collaboration with the Future Generation Joint Venture (FGJV), Snowy Hydro's partner in the project. Additionally, Snowy Hydro is actively resolving all outstanding claims with FGJV.
Through the project reset process, Snowy Hydro has successfully enhanced the project's capacity by 10%, resulting in a total dispatchable generation capacity of 2200MW. Furthermore, Snowy 2.0 will provide energy storage of 350,000 MWh, equivalent to 160 hours of generation at maximum output.
The cost revision reflects the cumulative impact of various external factors, including the challenges posed by the COVID-19 pandemic, labor shortages, disruptions in global shipping and supply chains, inflation in construction materials and labor costs, as well as design complexity. Despite these challenges, Snowy 2.0 remains economically viable, with strong market demand expected to support its services well into the future.
As of now, construction progress on Snowy 2.0 stands at approximately 40%, with various key milestones achieved, including tunnel excavations, underground power station development, and manufacturing of essential components. The project has also contributed significantly to job creation, with a dedicated team of approximately 2,700 Australians currently working on it, and an additional 1,500 jobs anticipated over the project's lifespan.
Webuild, a key partner in the Snowy 2.0 project, has welcomed the announcement by Snowy Hydro. In a statement, Webuild highlighted its commitment to the project despite the challenges faced in recent years. They emphasized the significant achievements made to date, including the launch of tunnel-boring machines, production of concrete segments, job creation in the Snowy Mountain region, and increased female participation in the project. Webuild expressed pride in contributing to a strategic renewable energy project that supports a transition to a low-carbon emissions future, building upon the legacy of the original Snowy Hydro scheme.