Snowy Hydro 2.0 is a sunk cost fallacy

I reported this week that the cost of the Snowy Hydro 2.0 project is estimated to have ballooned from an initial announced cost of $2 billion in 2017 to around $42 billion.

This cost estimate by Professor Bruce Mountain and former energy executive Ted Woodley includes direct construction costs of $20 billion, transmission infrastructure costs totalling $12 billion and interest charges of $8 billion over 15 years:

Mountain and Woodley said Snowy 2.0 had always been a “dreadful idea” and labelled it “one of the biggest disasters” in Australian infrastructure.

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About the author

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.