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27 Feb 2023

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Delays and Overruns Causing Trouble for Australia's Snowy 2.0 Hydropower Project

Posted with permission from ESG Impact Zone.

by Giles Parkinson

Federal energy minister Chris Bowen says he is not happy with the delays, cost over-runs and ongoing problems at the massive Snowy 2.0 project, but insists that the project will go ahead, and will not be canned.

“I’m not here to pretend to you that I’m happy about everything that has happened at Snowy 2.0 because I’m not,” Bowen told the ABC Insiders program on Sunday, just a few weeks after announcing a new CEO and after revelations that one of the big tunnelling machines was stuck underground and had made little progress.

The situation at Snowy 2.0 appears to be getting worse with each passing month. Bowen came to his post in May last year and discovered that the project was already running 12-18 months behind schedule and that fact had been kept secret by the previous government.

It is also running well over budget, and may face claims of another $2.2 billion in costs – in addition to the blowouts that has pushed the project budget out to $5.8 billion, not including transmission.

It has also had one of its major contractors go bankrupt, and may face more delays and over-runs unless a solution can be found to the tunnelling issues.

That has led to calls from some of its critics that the government-owned Snowy Hydro should cut its losses and abandon the project.

Critics fear that more lengthy delays will delay coal plant closures because enough replacement capacity will not be built, and partly because the prospect of Snowy 2.0 caused many other projects to be cancelled.

See: Snowy 2.0: The making of one of Australia’s most spectacular infrastructure debacles

“The project is important. It’s a good project when it’s finished. The project will proceed,” Bowen told the ABC. But he didn’t say what the solution would be.

Well, I won’t be down there with a shovel myself – what I will be doing is working very closely with Snowy management, which is what I’ve been doing.

“As you know. I’m not here to pretend to you that I’m happy about everything that has happened at Snowy 2.0 because I’m not. And it is delayed by at least twelve months.

“And that is deeply disappointing because it is important for the stability of our grid going forward. And when I came to office, one of the first pieces of advice the department gave me was that it was running twelve to eighteen months late and that had not been made public.

“And I took the decision that that should be made public immediately and that we needed a plan in place to get it back on track.”

Bowen said the new CEO, Dennis Barnes, had timelines and getting the project back on track “very high on his KPIs” and is hopeful that a “completely fresh set of eyes” and a “completely fresh approach to what has been a problematic project” that the government inherited will lad to a solution.

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