Snowy Hydro has emerged as Australia’s fourth-largest energy utility after the $600 million purchase of Lumo Energy, part of the Australian assets of New Zealand company Infratil. The purchase gives the Victoria-based owner of the Snowy Hydro scheme and two peaking power stations in that state, additional peaking power stations across SA and NSW. It also includes a site for a potential gas-fired power station south of Sydney.
According to Standard and Poor’s analyst Richard Creed, the move shows that Snowy Hydro is “trying to evolve into the fourth pillar [in electricity supply].” Creed also noted that the acquisition showed that the competition in Australia’s power retail space was “not going away.” Snowy Hydro managing director, Paul Broad, appears to agree. “This deal is going to increase competition right across the east coast,” Broad said. “The deal will be earnings accretive from day one.”
Infratil has more than 515,000 customers via its Lumo Energy brand which, with Snowy’s customer base of more than 400,000, makes it the clear leader of the second-tier energy retailers, lagging only the industry leaders AGL, EnergyAustralia and Origin Energy. Broad says Snowy Hydro will maintain the two retail brands of Lumo and Red Energy, which have different market approaches.
In other news…
Another Australian power company, Alinta Energy, has confirmed it is up for sale, with US private equity firm TPG Capital reportedly looking to unload the power generation and distribution business – one of its largest Asian-Pacific investments – for up to $4 billion. TPG paid $650 million four years ago to acquire 30 per cent of Alinta’s debt and equity, and then refinanced its loans to the company last year, recouping $270 million. The move helps explain why Alinta accepted ARENA’s terms for such a lengthy feasibility study into plans to transform its mothballed Port Augusta coal plant into a hybrid solar thermal power station. As we wrote back in January, Alinta had an economic interest in keeping its coal-fired generators as long as possible: “More renewable energy dilutes its returns, as it does for other fossil fuel generators, which is why Alinta has been one of the more aggressive opponents of keeping the RET as is. Alinta, it should be remembered, is owned by private equity interests… and they will want to make a clean, profitable and uncomplicated exit within a few years.”
EY (formerly Ernst & Young) is buying up one of Australia’s leading energy market systems and modelling consultancies, Roam Consulting. The company’s Oceania Power & Utilities Leader Matt Rennie says the addition of the Roam team to EY, including founder and executive chairman Ian Rose and managing director Ben Vanderwaal, will significantly extend its capabilities in the power and utilities sector. “The specialist energy market modelling and data analytics that Ian, Ben and their team bring to EY will enable us to grow our national valuation and business modelling team and further build our economic and regulatory capabilities in the power and utilities sector,” said Rennie. “We are the first professional services firm in Australia and New Zealand to offer this breadth of service offerings, so it’s a very exciting development for EY, particularly given the changes occurring throughout the energy sector right now. The extended capability is key for helping both public and private sector clients making capital investment decisions.”
Australian businessman and environmental activist Geoff Cousins AM has been elected to succeed Professor Ian Lowe as President of leading environmental NGO, the Australian Conservation Foundation. ACF CEO Kelly O’Shanassy said in a media statement that Cousins’ “long and distinguished” career in business and his successful campaigns to stop the Gunns pulp mill in Tasmania and the proposed Woodside gas hub on the Kimberley coast made him an ideal candidate for the job. “He brings to ACF a brilliant understanding of how business in Australia works and how people power can change things for the better,” O’Shanassy said. In accepting the role, Cousins said the environmental challenges facing Australia were now bigger than ever. “Sadly our governments are taking Australia in the wrong direction, damaging nature and our fragile climate,” Cousins said. “There has never been a more crucial time for ACF.”
