Bogged, blown out by $10 billion, but not beaten: Snowy 2.0’s rocky path to power millions

A shrine to Saint Barbara, the patron of tunnellers and others who work with explosives, stands at each of the entrances to the 27 kilometres of tunnels for the Snowy 2.0 mega-pumped hydro project in the Snowy Mountains.

Since construction began in early 2019, the saint has watched over the massive undertaking as its cost and deadline blew out, the delays typified by Florence, the tunnel boring machine, which was bogged for months in soft ground deep underneath Kosciuszko National Park.

Snowy 2.0 project director Dave Evans in the cavern that will house the huge turbines and transformers that will send electricity to the grid. Credit: Alex Ellinghausen

Announced in 2017 by then-prime minister Malcolm Turnbull as a $2 billion project with a deadline of 2021, Snowy 2.0 has been slammed as a white elephant. Its price tag has hit $12 billion and its deadline extended to December 2028.

But Saint Barbara is now repaying the faith of workers who put her in place, as hopes rise that what will be one of the world’s biggest water batteries will, in fact, eventually be ready to play a critical role in the eastern seaboard’s energy grid as it shifts from fossil fuel-generated electricity to renewables.

Dennis Barnes was appointed chief executive of Snowy Hydro in February last year. He will lead the Commonwealth-owned corporation that is building and will own the project. He does not hide his frustration that the wildly optimistic claims from Turnbull at the project’s launch have cast a pall over it ever since.

Turnbull specified a cost and deadline before a feasibility study had been done. He announced the scheme only two weeks after it was floated by Snowy’s former chief Paul Broad, a combative figure who stepped down shortly after the incoming Albanese government appointed Chris Bowen as energy minister after the May 2022 election.

The benchmarks were so optimistic that the project was doomed to miss them. “No one in any part of Snowy or government recognised that number,” Barnes said of the $2 billion price tag.

Once the feasibility study was completed, it was costed at $6 billion. “The approval was for $6 billion – $2 billion doesn’t get you past the mobilisation phase,” he said.

Barnes puts the current estimated final cost of $12 billion down to “design immaturity”, global inflation following the COVID pandemic and the high costs of labour and steel.

Barnes said the project was now 60 per cent complete. He is confident that further major cost and deadline blowouts are not likely. He concedes, though, that the soft ground that unexpectedly bogged Florence could reappear: “There’s still geology that could have us undone.”

Snowy shelled out $75 million in August to get a fourth tunnel borer to assist Florence. She spent most of last year stuck in the soft ground less than 100 metres into her work. Then, on May 16, she became wedged in hard rock while excavating a curve in the tunnel, and it took a team of contractors with high-pressure water jets seven weeks to blast her free.

Florence is 1.6 kilometres into the 17-kilometre “headrace” tunnel, which will house the massive pipe that will connect the Tantangara reservoir, at the high point of the project, to the powerhouse, a huge cavern 20-storeys high that will house electricity-generating turbines. The powerhouse will be the biggest such excavation in the southern hemisphere.

The headrace tunnel includes a section of steep fall, where water will race downhill to spin the turbines and generate electricity.

Water will then flow from the turbines into another tunnel, the “tailrace” tunnel, which connects to the Talbingo reservoir at the bottom of the hill.

When power is plentiful on the grid, Snowy 2.0 will take advantage of lower electricity prices to send the water back from Talbingo and into Tantangara. The turbines switch roles from generators to pumps to move the water up the hill through the same tunnels it came down. Once there, the water is ready to repeat the energy-generating process.

Dave Evans, Snowy 2.0’s project manager, said the pressure he felt from politicians and electricity grid managers to complete the project on time showed just how crucial the project would be to making Australia’s dream of reliable renewable energy a reality.

He’s adamant the bad news of cost and deadline overruns is out of the way.

Evans leads a team of 3000 workers in the remote mountains. They work 14-day shifts with seven days off in between.

The original Snowy Mountains Hydro-Electric Scheme, which took from 1949 to 1974 to complete, had a peak workforce of 7300. Evans points out “they lived in tents, and we have cabins”, but he’s focused on the smaller, modern iteration leaving a similar legacy.

“As you learn more about the impacts it will have, it just draws you in, and so you get quite a sense of achievement out of it,” Evans said. “The legacy of what we’re doing on Snowy 2.0 is extremely important.

“A while ago, we were working really hard and doing long hours, and I realised that not everyone really knew what we were designing and how much impact it would have, so I asked one of the past workers to come in and do a one-hour session on the original scheme.

“Our current workers, they’re in awe [of their 20th-century counterparts] ... And to be honest, we’re doing the same things.”

Dave Evans feels a sense of pride in the legacy being created by the Snowy 2.0 project.Credit: AFR

Florence is one of four boring machines excavating the project, along with Lady Eileen, Kirsten and the most recent addition, which is yet to be named.

It takes 25 people to operate the 140-metre-long boring machine, with 94 hardened steel plates on the rotating head that do not grind the rock, but fracture it under immense pressure.

Lady Eileen has completed a three-kilometre access tunnel for workers to build the powerhouse, and has two kilometres left to go on the six-kilometre tailrace tunnel.

Pumped hydro projects are called water batteries because they store power for when it is needed. The Australian Energy Market Operator (AEMO) views Snowy 2.0 as crucial because the government is committed to raising the grid’s proportion of renewables to 82 per cent by 2030.

It will be called on when there is a demand on the grid that other sources can’t meet, such as during a period of cloudy weather with low solar output that coincides with a run of still days that produce little wind power.

But the renewables rollout has not gone as quickly as hoped, despite coal plants being rapidly run out of business by cheaper clean energy.

The energy grid operator forecasts that more than 90 per cent of the current coal capacity will be gone by 2035, raising the risk of gaps in electricity supply. A particular issue is that wind projects, which are needed to complement solar power during cloudy weather, are proving slower to develop than first anticipated.

Snowy 2.0 will deliver gargantuan volumes of power on demand– it will be able to run 3 million homes for a week.

This is music to the ears of the federal and state governments that have committed to switching from fossil fuels to renewables to cut emissions, as well as the AEMO, which is tasked with ensuring the lights stay on in peoples’ homes.

However, some energy experts question the wisdom of staking the security of the renewables rollout solely in one mega-project and argue that multiple smaller projects would be quicker, cheaper and less risky to build.

Ted Woodley, a former managing director of EnergyAustralia, PowerNet, GasNet, and China Light and Power Systems (Hong Kong), is a long-time critic of the project. He has argued Snowy 2.0 is far too expensive to build. Other, cheaper energy storage projects would have fewer costs to recoup and could therefore sell power into the grid more cheaply, he says.

However, the former prime minister who brought Snowy 2.0 into the world is unrepentant about his early optimism. “There’s no critically important piece of infrastructure that somebody has not tried to stop being built,” Turnbull told the ABC last year.

The man who has to carry the burden of the cost blowouts now is Barnes. Despite his criticism of Snowy’s hurried birth, he ultimately agrees you have to take the plunge on big projects at some point.

“You always end up with a bit of optimism bias when trying to deliver on your vision,” he said. “If you enter the level of detail that gave you zero execution risk, you’d probably never make the decision.”

Get to the heart of what’s happening with climate change and the environment. Sign up for our fortnightly Environment newsletter.