The White Elephant Award goes to...Snowy Hydro 2.0

Costs, costs and more costs

That the whole Snowy 2.0 project was decided upon in about two weeks as revealed in Senate estimates in 2018 - from Snowy Hydro pitching the concept to the then Prime Minister's Office, to it being announced two weeks later by Turnbull - was never going to bode well for the project. Rushed decision making is one of the prerequisites for white elephant projects to occur.

Snowy 2.0 was originally announced in 2017 with an estimated $2 billion price tag by PM Turnbull and with a completion timeframe of 4 years.

This was in addition to the $6 billion the Commonwealth spent to take full ownership of Snowy Hydro Limited buying out the shares of the New South Wales and Victorian Governments.

The initial feasibility study provided a base range of $3.8 billion to $4.5 billion, though the economic analysis had been excluded from the public facing document.

Then in 2019 it was revealed by the winning contractor that Snowy 2.0's official cost came in at $5.1 billion, covering tunnel and power station construction costs. This did not include costs for upgrading existing and building new transmission infrastructure.

Currently, the total cost of Snowy 2.0 is expected to exceed an eyewatering $10 billion for construction and transmission infrastructure. And is expected to be completed in the late 2020s, at the earliest.

There is no doubt that the project will end up costing billions upon billions more than that. And it will most likely face further delays.

Where to from here?

Further delays to the project are set to have implications for the future of the NEM and its ability to absorb greater amounts of renewable wind and solar generation in the years ahead. That could prove problematic for a Commonwealth government promising to achieve 82 per renewable share of the NEM by 2030. The Australian Energy Market Operator (AEMO) is already warning of future supply constraints should there be more delays, adding further pressure as aging coal-fired generators like Eraring exit the market before the end of the decade.

Like the original Snowy Hydro Scheme, there remains questions over the feasibility of the project and its ultimate benefits - both economic and environmental - that have never been adequately addressed.

Indeed, the original Snowy Hydro Scheme is seen by some like Dr Richard Evans as Australia's Great White Elephant - an epic engineering feat, but a white elephant nevertheless. And it seems Snowy 2.0 is well on its way on achieving such epic status - perhaps Australia's Great White Elephant 2.0.