The Hunter Power Project at Kurri Kurri burned its first gas more than two years behind the schedule Snowy Hydro announced back when the site was a paddock off the New England Highway near Loxford. It’s now operating as a peaking plant supplying the NEM in the way it was always meant to, which is a milder sentence than this project has earned, frankly, given how much argument it generated along the way. The short of where things stand: it’s built, it’s running, it cost roughly double the figure first put to government, and the hydrogen story that sold a chunk of the public case for it has quietly become background noise rather than a near-term plan.
I’ll admit I went back to my own notes from the 2021 announcement to check I wasn’t misremembering the numbers, because the gap is the kind that makes you want to double-check. It wasn’t misremembered.
What actually got built at Kurri Kurri #
The project is a peaking gas plant in the Hunter Valley, on a site adjacent to the old Kurri Kurri aluminium smelter, connected into the existing transmission corridor that already served heavy industry in the area. Snowy Hydro’s design uses General Electric aeroderivative turbine units, the same broad technology family used at plenty of other fast-start peakers around the NEM, chosen specifically because they can get from a cold start to full output in minutes rather than hours. That’s the entire job description of a peaker: sit idle for most of the year, then answer a call within a market dispatch interval when demand spikes or when wind and solar drop away faster than forecast.
The originally announced capacity was 660 megawatts across the site. Snowy Hydro’s own public statements and project updates have tracked the build in stages, with the facility reaching commercial operation on gas after running on diesel as an interim measure while gas pipeline connection works were completed. That diesel period is worth sitting on for a moment, because it was never the plan and it tells you something about how badly the critical path slipped.
The hydrogen claim that did a lot of political work #
When Kurri Kurri was announced, “hydrogen-ready” was doing more heavy lifting in press conferences than it was ever likely to do in the turbine casing. The pitch was that the plant could eventually run on a hydrogen blend, positioning it as a bridge asset rather than a straight gas investment, which made it easier to defend against criticism that the Commonwealth was underwriting a fossil-fuel plant at exactly the moment the Paris-aligned rhetoric was hardening.
The engineering reality is narrower than the slogan. GE’s aeroderivative turbines can run on hydrogen blends at the low end, generally cited in industry technical literature as being in the vicinity of 15 to 30 per cent by volume depending on turbine configuration and combustion system, well short of 100 per cent hydrogen firing, which remains commercially unproven at this scale for this turbine class anywhere in the world. Getting to higher blend percentages needs further combustor development that hasn’t been demonstrated commercially. None of that makes the “hydrogen-ready” language dishonest exactly, but it’s an engineering option sitting a long way down the priority list, not a near-term operating mode, and readers deserve the distinction rather than the marketing version. I’d put it plainly: the hydrogen framing was more useful to Kurri Kurri’s political approval than it will be to its actual dispatch profile for years, possibly a decade or more.
This is a pattern worth watching across the sector, not just at Kurri Kurri. Our explainer on what firming actually means and why gas keeps coming up goes through why this sort of asset gets built for a specific, narrow job, and why that job rarely matches the broader decarbonisation story attached to the ribbon-cutting.
The cost blowout, in actual numbers #
The Commonwealth’s original commitment through Snowy Hydro was in the order of $600 million when the project was first announced in 2021, funded as a direct equity investment because Snowy Hydro is wholly Commonwealth-owned. By the time construction delays, COVID-era supply chain disruption, contractor issues and the diesel-to-gas transition were all tallied, public reporting and Commonwealth budget papers have put the final cost north of $1.2 billion, roughly double the original figure. That’s not a rounding error on a government energy project; it’s the kind of overrun that would sink a private developer’s next capital raise.
Snowy Hydro has attributed the delays and cost growth to a mix of construction contractor performance issues and the broader inflationary environment that hit construction projects across the country through 2022 and 2023, the same period that pushed out transmission timelines on projects like VNI West and strained budgets on renewable energy zone builds more generally. There’s truth in that context. But it doesn’t fully explain why a relatively conventional peaker, built on a brownfield industrial site with existing grid access, took this long to get gas into the turbines instead of diesel. Projects of similar scope and turbine technology have been built faster elsewhere in the NEM.
Why a peaker like this matters for the grid regardless of the politics #
Put the overrun to one side for a second, because the engineering case for having fast-start gas capacity in the Hunter region is sound on its own terms. The NEM’s firming requirement is growing as coal exits and renewable penetration rises, and AEMO’s Integrated System Plan has been consistent for several editions now in saying the system needs dispatchable capacity that can respond within minutes, not hours, to cover gaps left by wind and solar variability. Our rundown of what the Integrated System Plan actually says goes through this in more detail, but the short version is that AEMO doesn’t particularly care what fuel fills that gap, so long as something reliably does.
Kurri Kurri sits in a part of the grid, the Hunter, that’s losing significant coal capacity over this decade as Eraring and Liddell-era generation winds down or has already gone, and that region needs replacement firming capacity whether or not the exact mix of gas, batteries and transmission upgrades looks the way anyone originally planned. The plant’s fast-start characteristics make it comparable, in function if not fuel source, to the big battery fleet now spreading across NSW, including assets like the Waratah Super Battery. Both exist to answer the same five-minute dispatch problem; they just get paid for very different reasons and carry very different emissions profiles while doing it.
Where the maths actually sits against batteries #
This is where I think the public conversation about Kurri Kurri went sideways, because people kept comparing it to baseload coal when the honest comparison is against batteries doing the same firming job. Our analysis on gas peakers versus big batteries in 2026 sets out the current state of that maths, and it isn’t flattering to gas peakers on a pure levelised cost basis for short-duration response, where batteries have got dramatically cheaper over the past three years. Gas still wins on long-duration backup, the multi-day lull scenario batteries generally can’t cover economically yet, and that’s genuinely the gap Kurri Kurri is built to fill.
Where gas peakers like Kurri Kurri keep an edge is in exactly the scenario batteries handle worst: an extended low-wind, low-solar stretch spanning several days rather than several hours, the kind the east coast has seen during winter high-pressure systems. A 660 megawatt gas plant can run flat out for as long as fuel supply holds; a battery fleet of similar nameplate capacity is typically sized for two to four hours of continuous discharge before it needs recharging, which it may not be able to do if the wind and solar drought that created the demand spike in the first place is still going. That’s a genuinely different service, and it’s the reason I’d push back a little on anyone treating Kurri Kurri as simply an expensive mistake that a battery could have replaced for less. A battery could have covered a lot of its operating hours more cheaply. It wouldn’t have covered all of them.
What it means for the Commonwealth’s broader gas posture #
Kurri Kurri also sits inside the wider argument about east-coast gas supply that our colleagues have covered extensively, including the piece on whether the Australian gas industry has been written off too early. A government-owned peaker burning gas doesn’t change the supply-side pressures on the east-coast gas market; if anything it adds a new buyer to a market that AEMO’s own gas statement of opportunities has flagged as tight in southern states during peak winter demand periods. Snowy Hydro will need to secure gas supply contracts for Kurri Kurri’s operating life the same as any other generator, competing for molecules against industrial users and retail gas customers in a market that hasn’t got materially looser since the plant was first conceived.
The Clean Energy Regulator’s annual data on generator emissions will eventually show Kurri Kurri’s actual running hours and emissions intensity, which will be the real test of whether it operates as the occasional-use peaker it was designed to be or something closer to a more regular contributor. Low capacity factor is the whole point of a peaker; if Kurri Kurri starts running at high utilisation it either means the grid needed more firming than planned, which is plausible, or it means the economics of gas versus renewables shifted in gas’s favour at the margin, which would be its own story.
The honest ledger on a project like this #
I keep coming back to a comparison with Snowy 2.0, not because the projects are technically similar, they’re not, but because both show what happens when a government-backed energy asset gets announced with a round number and a confident completion date, and then runs into the gap between political timelines and construction reality. Our long-running coverage of whether Snowy 2.0 will ever earn its keep covers that pattern in more detail on the pumped hydro side.
Kurri Kurri isn’t a disaster. It’s a working peaking plant doing a real job in a part of the grid that needs the capacity, built by a Commonwealth-owned entity that will wear the cost overrun through its own balance sheet rather than passing it directly to consumers in the way a regulated transmission cost might flow through. But it’s also a clean case study in how “hydrogen-ready” became a phrase that sold political approval faster than the combustion engineering could ever catch up to it, and in how a $600 million peaker turned into a $1.2 billion one without anybody being able to point to a single villain. Agree on those two facts and the rest of the argument about Kurri Kurri gets a lot less heated.
Next time someone announces a “hydrogen-ready” gas plant with a confident price tag attached, I’d suggest asking what blend percentage the turbine manufacturer will actually warrant, and asking it before the ribbon gets cut rather than after.
– Tom Fitzgerald, Baseload & Fuels Correspondent
Photo by Nicolas HIPPERT on Unsplash