Snowy Hydro hit with delays and tunnelling drama

The federal government-owned Snowy Hydro has been hit with a further setback after confirming 12-month delays at both its Snowy 2.0 project and Hunter Valley gas plant in NSW.

The giant Snowy expansion has been beset by a series of delays and cost blowout issues, including the collapse of one of its main contractors, Clough, late last year.

The federal government-owned Snowy Hydro has been hit with a further setback after confirming 12-month delays at both its Snowy 2.0 project and Hunter Valley gas plant in NSW, while tunnelling has also been paused amid fresh geological problems at the hydro site.

The giant Snowy expansion has been beset by a series of delays and cost blowout issues, including the collapse of one of its main contractors, Clough, late last year.

The Covid-19 pandemic put its contractors, Clough and Webuild, behind schedule and while Snowy had held out hope of clawing back delays, the official start-up for the development has now been put back until the end of 2027 from December 2026.

“Snowy Hydro continues to work collaboratively with the Snowy 2.0 principal contractor – Future Generation joint venture – to review valid contractual claims, as well as schedule recovery. Key to reducing uncertainty is understanding the excavation rates in the cavern complex,” a Snowy spokesman told The Australian.

“Consistent with evidence provided by Snowy Hydro at Senate estimates in November 2022, Snowy Hydro has updated the Australian Energy Market Operator with a target commercial use date of 30 December 2027.”

Any delay will also add to electricity system risks after the grid operator warned of worsening forecast reliability in NSW in 2026 and 2027 should Snowy not hit the original 2.0 deadline.

A new tunnelling drama has also added to tensions on the project with Snowy’s tunnel boring machine, named Florence, also forced to stop operations after struggling with soft ground conditions. Florence had “been traversing a section of soft ground and is temporarily paused while plans to remediate a surface depression above the Tantangara adit are finalised”, Snowy said in a separate statement on Sunday.

The facility involves building a new 240m-long pumped hydro power station sitting 800m underground, which connects to 27km of tunnels between the Talbingo and Tantangara reservoirs.

Snowy’s newly named chief executive, Dennis Barnes – who will face Senate estimates on Monday – also faces pressure to deliver the company’s Hunter Valley gas plant on time.

The timeline has now slipped by a year to December 2024 with wet weather causing delays.

“Snowy Hydro remains focused on progressing the Hunter Power Project to meet the needs of the market, and is working through challenges linked to the wet weather, which has impacted the project’s schedule,” the company spokesman said.

“Snowy Hydro has provided a target commercial use date for the Hunter Power Project to AEMO as 31 December 2024, which remains subject to finalising a mid-project review.”

Mr Barnes’s predecessor, Paul Broad, fell out with federal ­Energy Minister Chris Bowen after he expressed doubts over Labor’s election pledge to convert the Hunter Valley gas plant in NSW to a 100 per cent green-hydrogen generator by the end of the decade.

Snowy has only committed that the gas station would be able to run on 15 per cent hydrogen after it signed a supply deal with Mitsubishi Power in October 2021.

Snowy in November said it was still working out a “business case” for the cost, due early in 2023, and sourcing of hydrogen for an initial 30 per cent target of the clean fuel at the industrial site.