EDITORIAL: University of Newcastle’s power deal points to the future

Snowy Hydro managing director Paul BroadTHE University of Newcastle’s decision to buy all of its electricityfrom Snowy Hydro-backed Red Energyis another example of the dramatic change unfolding within the national electricity market.
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According to the university, the contract will cost it $48 million over seven years, with Red Energy supplying some 40 gigawatt hours a year of electricity, or enough to power 5000 average homes.

Red Energy, led by its gregarious Novocastrian managing director Paul Broad, has plans to become a major fourth force in the electricity retail market, whether or not itsSnowy Hydro 2.0 plans championed by former prime minister Malcolm Turnbull are realised.

These ambitions were outlined on November 1 when Snowy Hydro announced it had signed long-term contracts with eight NSW and Victorian wind and solar providers that would allow it to provide wholesale prices to its customers of less than $70 a megawatt hour –a price that is seen as being considerably below the existing cost of coal-fired electricity.

It’s this power that Red Energy will sell to the university at prices that the institution is confident will save it money, while also allowing it to make a “positive environmental impact”.

Earlier this year, when Newcastle City Council announced it was going ahead with its Summerhill solar farm, it reported widespread interest from other local government authorities interested in following suit.

In a similar fashion, Red Energy hopes that its Newcastleannouncement will trigger similar interest from other universities, and has begun reaching out to other universities and business sectors across its broader market of NSW and Victoria. Last week it announced a similar deal to renewably power 40 commercial buildings owned by office tower landlord Dexus.

While the university deal has obvious positive social messages as far as fossil fuels and climate change are concerned –even if about one in five ns still have doubts over the link –it also locks the institution into a long-term arrangement at a time of massive change in the national electricity market.

Much of the uncertainty, unfortunately, comes from the years of energy wars in Canberra, but with our entire society effectively based around electricity,the industry and its major consumers mustforge on as best they can despite the political paralysis.

The Coalition government seems still determined to give a new coal-fired power station the best leg-up it can, and there is no doubt that fossil fuels will be needed for years to come in the n grid.

But Newcastle university’s determination to disassociate itself from fossil-fuel powerand Red Energy’s determination to build its business by supplying the clean alternative, shows that the market, and not the politicians, will be the final arbiters.

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