Originally published by Colin Packham and Perry Williams of The Australian.
05.06.2026
Snowy Hydro has conceded it may miss its 2028 deadline for finishing the Snowy 2.0 project and revealed its “disappointing” Italian contractor Webuild could suffer losses depending on the size of a major budget blowout.
The federal government-owned company set an end of 2028 deadline to deliver the giant pumped hydro expansion but its chief executive Dennis Barnes conceded hitting that target now looks challenging given a series of engineering and construction delays.
“The end of 2028 is not feeling comfortable,” Mr Barnes told The Australian on Thursday. “That’s probably that.”
The Snowy chief stressed while the official timeline remained 2028, there were a raft of complexities to consider as it reached the latter stages of construction.
“There’s three phases to this project: digging holes, concreting and building a power station. We started concreting. There’s just a degree of complexity as you get closer to the end, you get more certain as to when the end is. It’s big and complex.”
Webuild, the Italian contractor building the budget plagued Snowy 2.0, in April marked its Australian performance as “fantastic”, despite concern within the industry over a series of issues plaguing the giant hydro development.
However, Mr Barnes disagreed with Webuild handing itself a high rating.
“They’ve been a bit disappointing,” the Snowy chief executive said. “There’s been lots of things that they’ve had to deal with. They are pretty engaged with us. But it’s been challenging for them and it’s been challenging for us. Could they have done a better job? Probably.”
Asked to elaborate, Mr Barnes said: “I think that’s probably best left to when we announce the new cost.”
The Australian reported in April the true cost of Snowy 2.0 had spiralled to $42bn and should be the subject of a royal commission into “one of the biggest disasters” in the history of Australian infrastructure, according to two energy economists.
Snowy in October kicked off a nine-month, line-by-line reassessment of costs, overseen by independent experts as mounting productivity shortfalls, geological problems and rising procurement costs put further pressure on the already delayed and over-budget project.
Energy Minister Chris Bowen, who has pledged to reveal the cost hike by the end of 2026, said he expects Snowy managed Webuild to the highest possible standards, as outlined in its updated letter of expectations.
“The government has been clear about this. There is a review of cost currently underway which will be externally verified by independent experts to ensure that this project is delivered at the best value for taxpayers,” Mr Bowen said.
Webuild negotiated its multibillion-dollar contract to a cost-plus model, which meant Snowy would cover some of its contractor’s cost inflation on the massive pumped hydro expansion while paying an agreed profit margin on top.
However, Webuild faces exposure to any significant cost hikes due to clauses in its contract, according to Snowy.
The contract with Webuild “has them incentivised or penalised based on performance,” Mr Barnes said. “They’re very focused on that. We’ve got to see whether they respond. Their margins are pretty slim.”
One of Australia’s largest contractors, Acciona, this week criticised the troubled Snowy Hydro 2.0 scheme for its massive budget blowout and delays, accusing the company of damaging the reputation of the construction industry.
Webuild would be working hard to turn around its performance given the structure of the contract, he added.
“They’re going to turn it around because they see themselves entering a loss-making position,” Mr Barnes said.
“It’s an incentivised target contract. You give them a margin and an overhead. You pay them some incentives if they hit milestones. But then if they go over the cost that they committed to in the contract or they go past the dates they committed to in the contract, then they share in the pain of that. They build margin, they lose margin.”
Webuild booked €4bn ($6.5bn) of revenue from Australia last year alone with the nation now a close second in terms of revenue for the contractor behind Italy, and also its biggest pipeline going forward.
Workers on Australia’s biggest renewable energy project were handed upfront pay rises of at least $50,000 under a new deal in September 2025 that has them earning $300,000 annually, without any explicit productivity trade-offs.
The $42bn Snowy estimate by energy economists includes $20bn in direct construction costs, $8bn in interest charges over the 15-year build time, and $12bn as Snowy’s attributable share of transmission infrastructure including HumeLink and VNI West, originally designated as Snowy Link South and Snowy Link North.
The May budget showed the federal government accelerated a loan payment for the embattled Snowy 2.0 project and added a $975m equity investment as the flagship renewable energy development tackles cost blowouts and major delays.
Webuild was originally in a Snowy joint venture with Clough, which collapsed in 2022 after hitting severe financial difficulties.
The Italian contractor scooped up Clough for only $500,000 in cash along with the keys to Clough’s multi-billion dollar order book.
However, experts even at that early stage warned the Clough deal significantly raised the stakes for Webuild to deliver on several critical projects including Snowy 2.0 and the major electricity transmission scheme Energy Connect.
