Will Snowy Hydro change its spots after sudden departure of CEO?

The chief executive of the government-owned Snowy Hydro energy utility has suddenly resigned, and some reports say “sacked”, in what could be one of the most significant executive moves in the Australian electricity transition.

Paul Broad’s departure after nine years at the helm was announced in a statement posted on Snowy Hydro’s web site on Friday, sparking instant speculation by some media outlets that he had been sacked by new Labor climate and energy minister Chris Bowen.

Broad was seen as close to the former Coalition government and particularly the former energy minister Angus Taylor.

Like Taylor, he was very old school. He was a vocal critic of battery storage (a big competitor to the massive pumped hydro project his company is building), and fought against ideas such as demand management, which he dismissed as “enforced blackouts”. He did not appear to enjoy being questioned in Senate estimate hearings.

Broad’s departure follows controversy over the the company’s two big signature projects – Snowy 2.0 and Kurri Kurri gas, and comes as the company prepares to release its annual results, which may include some big surprises.

The Kurri Kurri gas project – enthusiastically supported by Taylor and funded by the government – has been widely criticised as not needed and not economic.  Labor has agreed to support it, but only if it is converted to green hydrogen, which would add significant costs.

There are also expectations that the Snowy 2.0 pumped hydro project is also running well over time, and well over its already blown out budget of $5.1 billion. It has attracted criticism over its scale, utility and environmental impact. Many believe it cannot deliver the storage that the company has promised.

Reports in the media on Friday suggested that Broad had been sacked by his board at the instigation of Bowen. A spokesperson for Bowen would not comment on those reports, but issued the following brief statement.

“The Government values SnowyHydro and its critical role in supporting a changing grid. The Albanese Government notes the resignation today of SnowyHydro CEO Paul Broad after almost ten years of service, and thanks him for for his work in the energy market over that period.”

Not exactly a ringing endorsement.

It is difficult to imagine how Broad could continue his role as the head of the government utility, because his views on the energy transition would appear to be incompatible with what Labor and the Australian Energy Market Operator are seeking to achieve by the end of the decade – a dramatic switch to 80 per cent renewables.

Snowy Hydro has constantly tried to play down delays and budget blowouts in Snowy 2.0, but the true extent may soon be revealed with Snowy’s annual results, as well as that next week of Murray and Roberts, the South African owner of its major contractor which has flagged a cost blowout.

Bruce Mountain, from the Victoria Energy Policy Centre, and a critic of the Snowy 2.0 investment, said the project should now be reviewed.

“The Snowy 2.0 saga rolls on,” Mountain said.

“The Government must now invite an independent inquiry of the project and it must get to the bottom of the role that Snowy’s Board and relevant Government departments knew of this obvious failure when the last Government decided it.

“It is also essential that the Government puts an immediate halt to Kurri Kurri and considers afresh the greenhouse gas and economic merits of that plant.”

The Snowy Hydro media release said Broad had, since he took the role in 2013, transformed Snowy Hydro into a “dynamic and integrated” energy business.

“Externally Paul is best known by the Australian public for his leadership on Snowy 2.0 and leading Snowy Hydro’s expansion into retail and renewable energy,” it said.

“Snowy 2.0 is a nation-defining and world-leading infrastructure project. It will underpin the transition to a decarbonised National Electricity Market and now employs more than 2,000 people, generating huge economic uplift in the Snowy Mountains.

“Under Paul’s leadership, the first Snowy Hydro renewable energy procurement program began in 2018 and has grown to encompass 12 contracts with wind and solar projects totalling 1.3 gigawatts of energy generation.”

It said chief operating officer Roger Whitby will act as CEO in the interim while a search for a new CEO is conducted.