After the project resets in 2023, Australia’s 2.2 GW Icy 2.0 pumped storage project will undergo a cost reassessment as Icy Hydro believes the project is still on track for December 2028 completion.
Snow Hydro has directed Snowy 2.0 principal contractor Future Generation Generation Venture (FGJV) to conduct a comprehensive line-by-line review of its costs to deliver Snowy 2.0. At 67 percent complete, Icy Hydro believes material cost pressures mean now is the time to monitor the FGJV as it undertakes a cost assessment that is expected to take up to nine months. Independent construction cost experts are engaged to verify the principal contractor’s revaluation.
Snowy Hydro CEO Dennis Barnes said Snowy 2.0 has made “good progress” since the 2023 project reset. Barfi Hydro said delivery rates have almost doubled over the past two years, with an average monthly progress of 0.57% to 0.91%, and a delivery target of 0.98% in August 2025. This is despite pressures that reflect the cost and productivity challenges currently being experienced in countless large infrastructure projects.
“Since the reset, the project has been generally progressing well and is now 67% complete,” Barnes said. “Despite disruptions, including work stoppages due to safety concerns and ongoing challenges with geology, we’ve been able to recover that time and get where we need to go on schedule. The reset was about building a more collaborative relationship with the principal contractor and getting the snow moving again by achieving safe development. We don’t need both.”
Snow Hydro argues that the “most significant sources of cost pressure” for Snow 2.0 since the restructuring include:
- Costs associated with the contractor’s productivity goals are not realized: Although the 2023 reset succeeded in substantially increasing productivity, challenges remain. This is due to a combination of factors, including delays from TBM stoppages in 2024, work stoppages associated with lower efficiency related to safety concerns and general productivity.
- The costs of de-risking challenging geology can no longer be absorbed: A fourth TBM will help weather the “challenging geological conditions” through the long simple fault zone and save the project’s schedule. Initial assessments were that the costs of the project would cover the cost to procure, deploy and operate, however cost pressures mean this is no longer feasible.
- Increase in Supply Chain Costs: The contractor for Barfi Hydro has identified “unexpected supply chain cost increases”, including significant, bespoke purchases, including large offshore purchases associated with the Barfi 2.0 underground power plant.
Barnes said that while the need to review the cost of Snow 2.0 is frustrating, the critical importance of the project to electricity customers across the network remains unchanged.
“Solar 2.0 will be the cornerstone of Australia’s transition to renewable energy, requiring more than half of the grid’s storage needs by 2050,” Barnes said. “It will enable the introduction of more wind and solar by acting like a giant battery, providing enough energy to power around 3 million homes for a week. Snowy 2.0 is being built to run for 150 years. It is now as important to Australia as the original Snowy scheme, which still helps underpin electricity reliability today.
Why restart?
According to a release, the Snowy 2.0 pumped storage project is the largest renewable energy project under construction in Australia and will provide critical deep storage for the country’s renewable transition. Since the last investment decision in December 2018, the price of Snowy 2.0 in the national electricity market has increased materially. Barfi Hydro said it would provide 200 MW or 10% of additional capacity, bringing the total capacity to 2,200 MW. Barfili 2.0 will provide 350,000 MW of energy storage for 150 years.
In December 2023, Factor this It has been reported that tunneling work on the headrace adit at Tintangarra for the Barfi 2.0 pumped storage project has resumed after the NSW Government approved a planning amendment for the project.
And in May 2023, the timeline and budget for the project were reset, with Ice Hydro saying that a variety of factors contributing to schedule delays and cost overruns were the impact of variable site and geological conditions, with the most influential soft ground encountered delaying TBM Florence’s progress at Tantangra.
In September 2023, Snowy Hydro revised its costs and completion date for Snowy 2.0. The revised total cost to complete was $12 billion, with first power delivery in the second half of 2027 and December 2028 as the target date for commercial operation of all units.
