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A major renewable energy project will be delayed by up to two years – why?

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Why is Snowy 2.0 being delayed? There are many reasons for the delay, which could impact Australia's renewable energy transition. Here's why.
Why is Snowy 2.0 being delayed?

A renewable energy project in NSW’s Kosciuszko National Park won’t begin full operations until the end of the decade.

Key infrastructure for the Snowy 2.0 project began in 2020, and was expected to be completed by 2026.

However, it’s now not expected to begin full operations any sooner than December 2028. COVID-19 and tight economic conditions are part of a number of reasons listed for the delay.

Background on Snowy 2.0

Snowy Hydro, which manages the Snowy 2.0 project, is a Federal Government-owned hydropower business.

Hydropower generates electricity from the natural energy created by the flow of moving water, typically captured in a dam.

The water is not used up in the process and the dam is replenished by rain. Therefore, hydropower is typically considered a renewable power source.

What is Snowy 2.0?

Snowy 2.0 is an expansion of an existing hydropower system called the Snowy Mountains Scheme. This is a network of dams and power stations that has been operational since the early 1970s.

Snowy 2.0 plans to connect two existing dams and build a new power station to lift power generation capacity.

It’ll provide enough energy to power three million Australian homes a week once fully operational. It’s expected to cost $5.9 billion, but this is likely to rise due to the delay.

Why is Snowy 2.0 being delayed?

Snowy 2.0’s management team announced on Wednesday that it would push back its completion target from 2026 to 2028 at the earliest.

They identified several reasons for this, including COVID-19, global supply chain disruptions, and inflation. The team said more time was needed to complete complex and more expensive design elements, and to navigate difficult geological conditions on the site.

Details on the financial impacts of the delay will be provided in July.

The implications of the delay

The delay to the project may have broader implications for the energy system.

Several coal and gas facilities are scheduled for closure in the coming years. Some have also had their closure dates brought forward.

However, concerns about energy supply shortages have prompted re-evaluation in some cases. The NSW Government is considering extending the life of the Eraring coal station, Australia’s largest power station, beyond its planned closure date in 2025.

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