Malcolm Turnbull has defended the ballooning cost of upgrading the Snowy Hydro scheme, arguing the "vitally important" project is financially viable.
The plan to increase capacity of the iconic scheme by 50 per cent will make up to 2000 megawatts available to the national electricity market.
A feasibility study has found the project, while financially and technically viable, is likely to cost between $3.8 billion and $4.5 billion, far outweighing the initial estimate of $2 billion.
"Of course it is an expensive project, but any big infrastructure project has a price tag," the prime minister told reporters in Sydney on Friday.
Mr Turnbull said the total cost would only soar to $12 billion if the Commonwealth bought out Victoria and NSW's ownership of the scheme.
"We certainly would welcome that, but that's really two different transactions," he said.
The study uncovered more complex geology than expected, pushing the cost estimate higher.
Mr Turnbull said the project would ensure reliable and affordable energy while helping Australia to meet emissions reduction obligations.
"The project is vitally important," he said.
"As we move to energy mix in which we have more and more intermittent sources of energy, you've got to have something to back it up when the sun isn't shining."
Labor have pounced on the higher price estimate, with energy spokesman Mark Butler saying the prime minister had painted an unrealistic picture of the project earlier in the year.
"This project only stacks up if it is put alongside an ambitious renewable energy program, like Labor's 50 per cent renewable energy target," Mr Butler told ABC radio.
While the opposition is supportive of the overall concept, it wants to see the modelling behind the feasibility study.
The project will link two major dams in the Snowy Mountains with 27kms of tunnels.
If it goes ahead, it won't produce power until 2024.
