Energy regulator warns of growing Snowy Hydro market power
The Australian Energy Regulator has sounded the alarm over the growing market power of Snowy Hydro as an increasingly important provider of back-up power for renewables, which it says have the potential to further increase costs in an electricity system where households are already struggling with higher bills.
The AER highlighted the rising concentration of ownership in particular in NSW and Victoria in flexible generation such as gas power, hydro and storage that can be switched on at will to meet peak demand as coal plants close and renewable energy grows.
Snowy’s hydro and gas power assets give it an increasing share of flexible generation in NSW.
It singled out the market shares of federal government-owned Snowy Hydro and – to a lesser extent – takeover target Origin Energy.
AER chairwoman Clare Savage voiced concerns around “open and competitive markets”, and pointed to the regulator’s beefed-up powers to monitor the situation.
“The AER’s anticipated new powers in relation to contract market monitoring will allow us to better monitor participant behaviour and gain sharper insights on issues of competition and market power,” Ms Savage said in the regulator’s annual assessment of electricity and gas markets.
The report said a few participants controlled “significant” flexible generation capacity in NSW, Victoria and Tasmania, pointing to Snowy’s control of more than 5000MW of plants that will jump further with the completion of the Snowy 2.0 pumped hydro project and the Kurri Kurri gas power plant in NSW.
Origin Energy – the subject of an $18.7 billion takeover bid led by Canada’s Brookfield – is the second-biggest provider of flexible generation, with “significant capacity across the mainland”, it said. The
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