“The Private Market Cannot Deliver:” Unions Want Government to Build Low Cost Green Power for Big Industry

Why It Matters

State‑run low‑cost green power could unlock decarbonisation for Australia’s energy‑intensive sectors and reduce reliance on costly private contracts, strengthening industrial competitiveness.

Key Takeaways

• Sovereign Power proposes $44/MWh cost‑price PPAs versus $78/MWh private
• Report estimates $14.5bn USD Future Made, $3.3bn USD energy‑intensive aid
• Only 3 of 31 CIS renewable projects reached financial close
• Government already owns Snowy Hydro, could supply cheap power to smelters
• Union backing aims to break industry bailout cycle and diversify economy

Pulse Analysis

Australia’s heavy‑industry exporters are confronting a stark reality: the private renewable market cannot guarantee the low‑cost, firm electricity needed for smelters, steel mills and emerging mineral processors. International peers such as Norway and the United States rely on publicly owned utilities to lock in long‑term rates, while Australian firms face private PPAs averaging $78 USD per megawatt‑hour. The price gap erodes profit margins and stalls the transition from gas‑fired plants to clean energy, threatening the nation’s broader climate and economic goals.

The “Sovereign Power” proposal seeks to replicate those successful public‑utility models by creating a federal entity that owns generation and storage assets and offers cost‑price PPAs at roughly $44 USD/MWh. CSIRO’s modelling suggests this pricing could shave more than $30 USD per megawatt‑hour off current contracts, delivering savings comparable to the $14.5 bn USD earmarked for the Future Made program. Leveraging existing government‑owned infrastructure—such as Snowy Hydro, which already supplies cheap power to Rio Tinto’s aluminium smelter—could accelerate rollout while avoiding the lengthy procurement cycles that have left only three of 31 Capacity Investment Scheme projects financially closed.

Beyond immediate cost reductions, a sovereign electricity provider could reshape Australia’s industrial landscape. Affordable clean power would make on‑shore ore processing, green‑hydrogen production, and advanced manufacturing financially viable, diversifying an economy long dominated by raw‑material exports. However, the model raises governance challenges: defining eligibility, preventing market distortion, and ensuring transparent oversight. If calibrated correctly, state‑run power could break the cycle of ad‑hoc bailouts, spur decarbonisation, and position Australia as a competitive hub for low‑carbon heavy industry.