Snowy 2.0 starts building its underground power station as the revised cost is reviewed

Snowy Hydro chief executive Dennis Barnes told a Senate Estimates committee on 26 May 2026 that he expected Future Generation Joint Venture to deliver its line-by-line reassessment of the cost of completing Snowy 2.0 before the end of June.

The contractor has delivered it. Snowy Hydro says it is conducting a detailed review of that reassessment, informed by independent construction cost experts, and is considering the commercial and practical implications to inform its advice to the Australian Government. The revised figure has not yet been published.

For a project the Commonwealth owns, that is more than 70 per cent built, and whose approved $12 billion budget dates from 2023, that number is the most significant open question about the project right now.

What has happened since

Four developments since Senate Estimates in May, none of which has yet produced a published cost figure.

The Auditor-General reported on the project's delivery. The ANAO's performance audit Delivery of Snowy 2.0, published on 18 June 2026, found Snowy Hydro's management of the project "partly effective", that the project is behind schedule, and that the cost reassessment is likely to result in a further cost increase. It found deficiencies in project governance and that Snowy Hydro did not have a robust understanding of the cost to complete. Snowy Hydro agreed to four of the five recommendations and partly agreed to the fifth. The audit's findings concern the owner's management of the contract, not only the contractor's tunnelling.

Work on the power station has begun. On 20 September, Snowy Hydro said permanent concrete pouring had started in the underground power station, with excavation of the machine and transformer halls more than 90 per cent complete and all six reversible turbines delivered to Australia.

Tunnelling continues on four fronts. Snowy Hydro told Renew Economy in early October that the project's four tunnel boring machines had completed 65 per cent of the 27 kilometres they must excavate. TBM Florence, whose progress was held up by soft ground at Tantangara before the 2023 reset, was approaching the halfway point of its 15-kilometre headrace drive by May 2026, according to Snowy Hydro.

None of this is the cost update. On 1 August, Climate Change and Energy Minister Chris Bowen said he had not yet received the reassessment; in late August he said it would be released after he had received it. In early October, Snowy Hydro and the minister's office both said they were working closely together on the reassessment. The figure remains unpublished.

Where the project actually is

Construction is more than 70 per cent complete — Snowy Hydro told the ANAO that overall progress was 73 per cent at 31 March 2026 — and Snowy Hydro continues to give December 2028 as the completion date.

Physical progress has been real. In May, tunnel boring machine Lady Eileen Hudson completed the six-kilometre tailrace tunnel into the underground cavern complex, connecting the lower reservoir to the power station and clearing the way for work to begin on the power station itself. In February, Snowy Hydro commissioned a fourth tunnel boring machine, Monica — a $75 million addition, first announced in August 2024, built to take on the Long Plain Fault Zone on the headrace tunnel and protect the December 2028 date.

Snowy Hydro said in October 2025 that the fourth machine's cost, initially expected to be covered within the project budget, could no longer be absorbed — one of the cost pressures behind the reassessment.

The schedule, and a discrepancy worth noting

Snowy Hydro's position, set at the 2023 reset: first power in the second half of 2027, with commercial operation of all six units by December 2028. Snowy Hydro restated the December 2028 completion date in October 2025, and Mr Barnes used it as the target date at Senate Estimates in May.

The ANAO's audit records later dates in the contractor's own forecasts. There is no agreed baseline schedule, and the contractor's February 2026 forecasts were unapproved by Snowy Hydro, in part because the forecast completion was materially later than the contractual time for completion. An August 2025 contractor update forecast first power on 20 July 2028 and full commercial operation on 3 May 2029; Snowy Hydro formally objected to it.

That gap has not been publicly reconciled. Anyone planning resourcing against this project should establish which date holds before committing.

The 2023 reset had already moved commercial operation from May 2026, the original contract date, to December 2028.

The cost question

The trajectory, from the first announcement:

Snowy Hydro has acknowledged the final figure will be higher than $12 billion. The line-by-line cost reassessment it ordered in October 2025, expected to take up to nine months, has been delivered by the contractor and is under review by Snowy Hydro; no revised figure has been published.

Meanwhile the funding profile has already moved. The 2026-27 Budget shows $2.9 billion in Snowy Hydro loan funds for 2026-27 — double the $1.45 billion the previous budget planned for that year. The same papers show no loan payment in 2027-28, where the previous budget had $1.45 billion, so the change brings the loan forward rather than enlarging it.

Any further funding will follow the reassessment. Snowy Hydro's corporate plan, as reported by the ANAO, expected additional government support to be required by the end of 2025-26.

Why this matters beyond Snowy

Snowy 2.0 has become a reference case in Australian infrastructure cost debate.

Snowy Hydro's own account of the 2023 reset names a mix of causes: skilled labour shortages, supply chain disruption and materials inflation, but also design immaturity at the final investment decision and variable ground conditions — most significantly the soft ground that held up TBM Florence. Minister Bowen has said the project was "immature at final investment decision".

What it demonstrates is how underground megaprojects behave when ground conditions and integration risk exceed what pre-construction investigation retires. That is a different problem to optimism bias at business case stage, and it has different implications for anyone pricing tunnelling work.

What to watch

1. Publication of the revised cost, once Snowy Hydro has completed its review and advised government. The minister has said it will be released after he receives it.
2. Whether December 2028 holds, against the later dates in the contractor's forecasts recorded by the ANAO.
3. First power, targeted for the second half of 2027. The six units are commissioned progressively, so first power is the earliest real test of the December 2028 date.
4. Further funding movements in budget papers, and any additional equity or loan announced alongside the revised cost.

Published 2 September 2026 · Updated 4 October 2026