Australian Consulate-General

Opportunities for Investment in Australian electricity generation

Australian Consulate-General, Guangzhou

Media Release PD29/07                                     17 September 2007

Opportunities for Investment in Australian electricity generation

-New South Wales to consider privatisation of its electricity market

Australia's largest State electricity industry, New South Wales (NSW) is considering privatisation of its power generation assets and opening up its retail electricity market, which may in turn introduce significant opportunities for investment in electricity generation and retail.

[This week], the Premier of NSW announced that his government will consider leasing the State's power generation assets and opening up its retail electricity to greater private sector competition.

This potential move is the result of a report (Owen Inquiry released on 11 September 2007) into the baseload electricity generation requirements of NSW which provides advice on investment in generation capacity (particularly baseload capacity), and addresses greenhouse gas emissions and the need to retain the state's AAA credit rating.

The Premier noted that private sector participation through long-term leasing could be an attractive alternative. He also stated that the government could retain its three existing retail companies while also selling up to 21 additional electricity retail licenses to private firms.

The NSW Government is now considering its formal response to the report's recommendations, which include increasing electricity baseload generation capacity by 2013-2014 through an estimated investment of some $A11-12 billion. This would comprise new generation capacity of $A8 billion, with a further $A3-4 billion spent retrofitting existing power stations to meet carbon reduction policies.

Potential technology solutions for new electricity generation capacity identified by the Owen Inquiry include combined cycle gas turbine (CCGT) and ultra-supercritical coal (USC). The report does not envisage privatising high-voltage transmission or low-voltage distribution networks.

Electricity generation companies owned by the NSW Government include Macquarie Generation, Delta Electricity and Eraring Energy, and its electricity retail companies are EnergyAustralia, Integral Energy and Country Energy.

Electricity Generation: Major Players 2005-06
Source: Global–roam, NEM-Review

  Generation Share of
Revenue Share of
New South Wales a GWh % A$m %
Macquarie Generation 28030 14.56 867 13.24
Delta Electricity 23286 12.10 876 13.37
Sithe Energies 1016 0.53 44 0.68
National Power 1064 0.55 38 0.57
Eraring Energy 14456 7.51 792 12.09
Snowy (for NSW) 198 0.10 8 0.13
Snowy Hydro Limited 5167 2.68 323 4.94

The Australian Bureau of Agricultural and Resource Economics (ABARE) has estimated that gross electricity generation in Australia will rise from 907 PJ (252 TWh) in 2004-05 to 1468 PJ (408 TWh) in 2029-30, an increase of 62% over the period. Although the use of renewable sources is expected to grow significantly, coal and gas are predicted to remain the main fuel sources for electricity generation. Demand for gas in the primary energy market (including electricity generation) is expected to rise from 1102 PJ in 2004-2005 to 2029 PJ in 2029-2030, an increase of 84% over the period.

Since the mid 1990s there has been increased private investment in the Australian energy infrastructure sector. While energy infrastructure has in the past been primarily a State responsibility, there have been endeavours to create a coordinated national approach to energy supply. The creation of a National Electricity Market (NEM), the segregation of energy businesses, and the liberalisation of ownership in the energy sectors have created opportunities for private sector investment. There are now a significant number of private players in all sectors of energy generation and distribution.

For more information about the Owen Inquiry Into Electricity Supply in NSW visit HERE:   

For further information, contact Ellen Chen, Public Affairs Officer on(020)3814 0183.