The budget for the troubled Snowy Hydro 2.0 project has blown out to $12 billion and will be finished seven years later than originally forecast, the company has confirmed.
New advice provided by Snowy Hydro shows the energy project would cost six times the amount it was originally budgeted for, with it now expected to be completed in December 2028.
The project, announced by former coalition prime minister Malcolm Turnbull in 2017, is expected to play a key role in Australia's clean energy transition.
But high construction costs and other challenges have seen the project blow out from its original completion date of 2021 and $2 billion budget.
Snowy Hydro chief executive Dennis Barnes said a reset of the project would allow it to be sustainable.
"Snowy 2.0 is being engineered to deliver clean and reliable storage and electricity generation for Australians for the next 150 years," he said.
"It is a truly transformative national project that is generating jobs and significant investment in regional areas.
"It will deliver benefits immediately following its completion and will continue to do so for many future generations of Australians."
Snowy Hydro said as of June, $4.3 billion had been spent on the project, with 80 per cent being reinvested back into the economy.
It is now expected the first power from Snowy Hydro 2.0 will be delivered in the second half of 2027, with all power to be operational by December 2028.
The cost blowout for the energy project has been blamed on "design immaturity" at the final investment decision stage, as well as geographical challenges such as softer ground hampering tunnel boring machines.
Energy Minister Chris Bowen said while Snowy Hydro had experienced challenges, it was looking to get back on track.
"This is one of the most complex engineering projects under way anywhere in the world, and it is subject to the same constraints and blowouts that all major infrastructure projects around the world are experiencing," he told reporters in Sydney.
"Things could have and should have been done better much earlier in the project's development."
Mr Bowen said part of the reset of Snowy Hydro would put financial benefits in place for contractors to deliver their services on time and on budget, while penalties would also apply for not meeting targets.
"It has not been well delivered up until now,'' he said.
"I want to make clear that is not the fault of the thousands of workers on site - they're doing a very good job in very difficult circumstances."
Opposition Leader Peter Dutton said while he was confident the project would be completed, the long delays amplified the need for other power sources in the country.
"I think it'll get finished, but I think part of the problem in our country at the moment is the government just has no regard to cost, they just think the taxpayers will pick up the bill for this," he told Sydney radio station 2GB.
"It's why we need to have a sensible conversation about the latest technology, small modular (nuclear) reactors."