Civil engineer who advised Liberal Party on energy policy says Snowy Hydro 2.0 should be stopped or delayed

A civil engineer who advised the Coalition on energy policy has suggested the costly Snowy Hydro 2.0 should be stopped or even cancelled if the costs keep escalating and the financial benefit can’t be justified.

Former Liberal prime minister Malcolm Turnbull in 2017 promised the pumped-hydro project in southern NSW would cost $2 billion and be finished within four years.

But energy economist Bruce Mountain, from Victoria University, now estimates the cost is more likely to be $42b, following complications with tunnelling.

“Under budgeted and poorly scoped in the first place,” Dr Mountain told The Nightly.

“I can’t think of anything that was well done.”

The Construction, Forestry and Mining Employees Union also has a stronghold on wage negotiations with tunnel workers getting $300,000 salaries.

“Undoubtedly, organised labour has Snowy Hydro in a corner,” Dr Mountain said.

Robert Parker, a civil engineer who advised former Liberal opposition leader Peter Dutton on nuclear energy, said it was now more prudent to halt Snowy Hydro 2.0 until a cost-benefit analysis could determine its financial viability.

“At any time in a project, is spending that forward cost going to give you a benefit? If it is not, don’t continue,” he told The Nightly.

“If you’re only going to increase the liability and give yourself no benefit, don’t continue.

“It needs to stop and it needs to be put under the aegis of some really skilled project estimators and contract people to determine where we are going.”

There’s legitimate questions to be asked over the due diligence

Mr Parker, a co-founder of Nuclear for Climate Australia, said geotechnical work appeared to have been rushed during the early stages of the project to meet an initial 2021 deadline, only for the project to be years behind schedule because of unforeseen problems.

A 143-metre tunnel boring machine became stuck in hard rock in 2024 after previously being bogged in soft ground in Kosciuszko National Park in 2022.

“With the announcement of the project, no exhaustive geotechnical work along the line was evident and so they got in and did it but the planning processes — which for a job like that could take up to a decade — were circumvented,” he said.

“Politicians love to see people pushing on regardless but often, from an actual money management perspective, you’ve got to say to yourself, ‘Do I really need to be pouring in barrel loads of money on multiple fronts?’”

An alternative to shutting down the project could be allowing time for proper geotechnical work to avoid a repeat of faulty tunnel boring machines creating more sinkholes, and giving the project a longer time frame into the 2030s for the 5000 workers involved.

“One course of action might be to call a halt for say three years or something and repopulate the job and build it more slowly — ‘let’s finish it but let’s take 10 years to do it’,” Mr Parker said.

Perth-based construction and engineering group Clough went into receivership in late 2022, just three years after costs blew out to $5 billion.

Italian civil and engineering construction group Webuild acquired Clough the following year, seeking a higher-priced tender given the risk.

“This was not a turnkey fixed-cost procurement,” Dr Mountain said.

But former Labor minister Mike Kelly, who represented the electorate of Eden-Monaro when the project was announced, said it was worth continuing with, despite the cost overruns, to guarantee energy security.

“There’s legitimate questions to be asked over the due diligence that was done beforehand. I don’t know how complex that was but I can imagine that was extremely difficult to get accurate geotechnical data for the whole of the project,” he said.

“Resolve those things and let’s complete the project because of the energy security issues that are associated with it, it’s going to be a vital part of the picture.”

Snowy Hydro at least admits its project to create a giant battery to store excess wind and solar power, by pumping water uphill, was complex.

“The pumped hydro expansion of the iconic Snowy Hydroelectric Scheme, Snowy 2.0 is one of the most complex and challenging feats of engineering underway in the world,” it said on its website.