“Being 40 per cent of the way through the project gives you a bit of confidence that you’re dealing with things you didn’t know five years ago,” Barnes said.
“Some of the assumptions made at the time were in a more benign environment … People cost an awful lot more now and things like steel and equipment have escalated.”
Bowen considers Snowy 2.0 critical to the government’s pledge to more than double the amount of power the electricity grid sources from clean energy to 82 per cent by 2030, as it can back up renewables when the wind isn’t blowing and the sun isn’t shining.
Green Energy Markets director Tristan Edis said politicians had not provided genuine economic and engineering reasons for backing expensive pumped hydro projects such as Snowy 2.0, which risked diverting construction industry resources from other projects critical to the renewable transition.
“The justification for why these projects are necessary and represent better value for money than other options for firming up renewables, such as batteries or gas generators operating on biofuels, has never been adequately explained,” Edis said.
Snowy 2.0, which uses surplus electricity to pump water uphill and then releases it to spin turbines at times of high demand, will increase the existing scheme’s total generation capacity to 375,000 megawatts hours, or enough to power 3 million homes for a week.
But Edis said batteries, which only run for hours at a time, could be deployed in concert with targeted use of gas plants to offer a low-emissions, low-cost alternative to pumped hydro.
“Studies of past historical weather patterns suggest that the need for 24-hour-long generation options are quite limited and may be better handled through gas turbines,” he said.
“The lack of a thorough, independent evaluation of these projects relative to alternatives raises concerns these pumped hydro projects are being pursued for political reasons.”
When asked how Snowy’s cost blowout would affect the rest of the energy portfolio budget, Bowen said the Commonwealth would absorb some of it, and raised the prospect of publicly funded equity investments.
He insisted there would be no cuts to planned spending in his portfolio.
“None of that’s on the cards. We continue with our energy agenda,” he said.
The Australian Energy Market Operator (AEMO) warned on Thursday that ongoing delays and disruptions to new energy projects such as transmission lines would elevate risks of power outages as soon as the coming summer in Victoria and South Australia, as ageing coal-fired power plants closed over the next few years.
A hot, dry summer is forecast and AEMO said a surge in demand for airconditioning during a heatwave or an unexpected coal plant breakdown could lead to a blackout.
Innes Willox, the chief executive of peak employer lobby Ai Group, said there were no magic fixes for the energy crisis but governments must commit to the “hard graft of implementation” of cheaper renewables or rising power prices would continue to slug households and businesses.
“If we can’t build, the lights will go out much more often and bills will be much higher – for people in the regions as much as people in the cities,” Willox said.
“If we can’t build, new industrial opportunities will vanish overseas – and so may much of our existing energy-intensive industries.”