Labor costs have also surged, with tunnel workers receiving wage increases of over 26% in four years, now earning more than $300,000 annually.

The Snowy Hydro 2.0 project in Australia, a major pumped hydro initiative, has experienced a dramatic escalation in costs, now estimated at around $12 billion—more than six times its initial $2 billion estimate in 2017—prompting a comprehensive review.

This project has faced multiple cost increases, with the latest being its fourth, driven by supply chain inflation, delays, and additional infrastructure needs, leading to a reassessment led by Italian contractors.

The project is vital for Australia's goal to reach net zero emissions by 2050, offering significant storage capacity expected to support the country's renewable energy ambitions.

Supply chain issues, including inflation and delays from tunnel boring machine stoppages, have contributed to the cost overruns, with the project currently 67% complete and a planned finish date of December 2028.

Physical and logistical challenges in the rugged terrain of Kosciuszko National Park, along with the failure of the original boring machine, have further complicated progress and increased expenses.

Energy Minister Chris Bowen acknowledged the disappointing cost reassessment but reaffirmed the project's importance for Australia's energy future.

Rising material costs, such as steel and concrete, driven by global supply chain disruptions from the COVID pandemic and geopolitical conflicts, have significantly contributed to the project's escalating expenses.

Despite technical setbacks, such as the tunnel boring machine Florence getting stuck in rock, progress continues with the arrival of a new machine, Monica, at the end of 2025.

While the project aims to bolster renewable energy reliability and grid stability by providing long-duration storage for three million homes, some experts question whether relying on a single mega-project is a risky strategy compared to multiple smaller initiatives.

Snowy Hydro's CEO, Dennis Barnes, emphasizes the project's critical role in Australia's energy transition, highlighting its importance for balancing renewable energy and ensuring grid stability despite delays and rising costs.

A detailed nine-month review of contractor costs is underway to address ongoing concerns about delays and budget overruns, with officials stressing the need for efficient delivery to ensure taxpayer value.