Snowy 2.0 could flood market with cheap energy, analysts say

The government-owned Snowy Hyrdo 2.0 could flood the market with cheap energy, curbing investment in dispatchable capacity or storage in a few years' time, analysts say.

Prime Minister Malcolm Turnbull during his tour of the
Snowy Hydro Tumut 2 power station during his visit
to the Snowy Mountains region to give an update on
Snowy Hydro 2.0.

Energy analysts and generators are concerned that Snowy 2.0's new ownership regime, following a $6.2 billion federal buyout earlier this month, means that changes in price may be driven more by political issues rather than commercial motives.

"It’s got the private sector worried as the government doesn’t operate by the same rules," Grattan Institute energy director Tony Wood told Fairfax Media.

"You end up with a weird game if the government can set prices and move the market. It really has the potential to distort the market; it doesn’t have to act economically to bring the prices down.

"That is the fundamental issue, as we’re seeing the potential conflict emerge with a single government-owned entity distorting the market.”

Read The Age story by Cole Latimer - “Snowy 2.0 could flood market with cheap energy, analysts say.”