March 15, the ides of March, marks the seventh anniversary of the Snowy 2.0 pumped hydro project, but I doubt anyone is celebrating, except maybe the lead contractor at its Italian head office. The euphoria on this date in 2017, when the Turnbull government heralded Snowy 2.0 as an electricity game changer, has long since dissipated. This nation-building project was meant to be completed in four years (yes, in 2021) for $2 billion, at no cost to taxpayers, and cause minimal damage to Kosciuszko National Park.

Impossible expectations, dashed by fundamental project flaws, multiple delays and skyrocketing costs.

A work in progress: the Snowy 2.0 pumped hydro project.

Let’s have a quick look at Snowy 2.0’s seventh year, undoubtedly its worst. Even Snowy Hydro Limited’s usually upbeat annual report conceded that “the delivery of Snowy 2.0 in FY23 fell well short of Board expectations”.

By last August, its predicament had become so dire that Snowy Hydro, with government endorsement, had to “reset” the entire project with a brand-new cost, completion target and main works contract.

The cost was doubled from $5.9 billion to $12 billion (the fifth blowout), with CEO Dennis Barnes lamenting, “obviously [we’re] very disappointed in the cost increase and of course we apologise for that”. Project completion was adjusted (for the seventh time) to December 2028. While $2 billion of outstanding contractor claims were settled, the centrepiece fixed-price contract for the “main works” was ditched as “no longer fit for purpose” and replaced with an “incentivised target cost” contract. That, effectively, makes it a cost-plus contract. So good luck with the $12 billion estimate.

Snowy Hydro’s nominated shareholders, Climate Change and Energy Minister Chris Bowen and Finance Minister Katy Gallagher, slammed the lack of transparency, the hiding of delays, “the design immaturity” and “the [difficult] site conditions and geology that should have been known at the time”. They promised transparency and honesty in the future, though have refused to provide any public details of the reset beyond a media release.

In the absence of any financial details, one can only assume the $12 billion estimate follows previous practice and excludes numerous project costs such as financing and capitalised interest (more than $4 billion), production of the tunnel concrete lining segments ($500 million) and transmission lines through Kosciuszko ($300 million), adding a further $5 billion or more.

Also, there is no recognition of the 1000 kilometres of transmission lines needed to connect Snowy 2.0 to Sydney and Melbourne, costing some $12 billion, of which Snowy 2.0’s share should be more than half. So, the all-up costs associated with Snowy 2.0 could now be more like $25 billion.