Snowy Hydro has confirmed that the cost of its ambitious Snowy 2.0 pumped hydro storage project has ballooned to a staggering $12 billion. 

Simultaneously, the price tag for its Kurri Kurri gas power plant has also surged to $950 million.

The federal government-owned energy generator, Snowy Hydro, acknowledged the uphill battle its Snowy 2.0 venture has faced. 

This includes delays, pandemic-related cost increases, and technical challenges during construction. 

However, Snowy Hydro remains resolute, insisting that despite the budget more than doubling, Snowy 2.0 still adds value.

In a statement released this week, Snowy Hydro affirmed that the Kurri Kurri generator also maintains its economic viability. 

The statement emphasised the plant's crucial role in providing “firming” capacity to support renewable energy sources like wind and solar power.

These revelations come following Snowy's earlier announcement this year about a comprehensive review of both project budgets and schedules. 

Both Snowy 2.0 and the Kurri Kurri gas plant are essential components of the nation's shift towards low-carbon energy.

Australia's Climate Change and Energy Minister, Chris Bowen, underscored the importance of these projects, describing them as “vital” for the stability of the eastern states' power grid.

CEO Dennis Barnes has expressed his unwavering commitment to ensuring the success and transparency of these crucial ventures. 

As part of this commitment, Snowy Hydro has reset the target date for the full operational launch of Snowy 2.0 to December 2028, slightly earlier than initially projected. 

In response to the challenges faced, Snowy Hydro has opted for a revised construction approach, moving towards an “incentivised target cost contract” model. 

Additionally, the maximum power output of the storage project will be increased by 10 per cent, reaching 2200 megawatts, while the storage capacity will remain at 350,000 megawatt-hours.

Snowy Hydro says it is actively collaborating with its shareholders to develop an appropriate capital structure to accommodate the increased costs while maintaining the company's target credit rating of BBB+.