Chinese investment in Australia’s power grid explained
There are four parts to the electricity market: generation, distribution, transmission and retail.
Of Australia’s eight states and territories, three governments retain full ownership of all elements of their electricity networks: Western Australia; Tasmania; and the Northern Territory.
Queensland also owns the generation, distribution and transmission of electricity, but the retail market has been privatised.
Chinese Government-owned State Grid Corporate and Hong Kong-listed Cheung Kong Infrastructure — the two companies whose bid for NSW electricity distributor Ausgrid were blocked by Treasurer Scott Morrison — already own significant shares in the privatised state power distributors.
Breakdown of Australia’s electricity industry
- Power generators, which produce energy to sell to the wholesale electricity market.
- Distributors, who design, construct and maintain the network of “poles and wires”
- Transmitters, which transport power from generators to the distribution system via the high-voltage transmission network
- Retailers, who purchase power from the wholesale electricity market to sell to retail customers
Australia’s retail energy markets have a multitude of private players but the big three are AGL Energy, Origin Energy and EnergyAustralia, which dominate southern and eastern Australia.
The trio jointly supply more than 70 per cent of small electricity customers and more than 80 per cent of small gas customers, as of June 30, 2015.
EnergyAustralia is owned by Hong Kong-based China Light and Power.
In the ACT, the Government owns 50 per cent of ActewAGL Distribution Ltd.
The other half is owned by Jemena, in which State Grid Corporate hold a 60 per cent share.
The remaining 40-per-cent share in Jemena is owned by Singapore Power International.
There are five electricity distributors in Victoria, with three partly owned by State Grid.
State Grid owns a 20-per-cent share in AusNet Services Electricity Distribution.
It also owns 60 per cent of Jemena, the company which owns Jemena Electricity Distribution Victoria and 34 per cent of United Energy Electricity Distribution Victoria.
Cheung Kong Infrastructure/Power Assets owns a 51-per-cent share in both CitiPower Electricity Distribution Network Victoria and Powercor Electricity Distribution Network Victoria.
The transmission link which transports renewable energy from the Mt Mercer wind farm to the Victorian grid — Transmission Operations (Australia) Pty Ltd Victoria — is partly owned by Cheung Kong Infrastructure.
The Hong Kong-listed group owns a 50-per-cent share.
In South Australia, Cheung Kong Infrastructure/Power Assets owns a 51-per-cent share, on a 200-year lease, in SA Power Networks Electricity Distribution network.
The transmitter in that state, ElectraNet, is partly owned by State Grid Corporation — at 46.5 per cent, it holds the largest share.
New South Wales
There are three main electricity distributors in NSW: Essential Energy, Endeavour Energy and Ausgrid. The NSW Government wants to sell half of Ausgrid to fund infrastructure projects.
Endeavour Energy is a NSW-owned distributor, covering Sydney’s Greater West, the Blue Mountains, Southern Highlands, the Illawarra and the South Coast.
Essential Energy is also Government-owned and delivers to 95 per cent of NSW and parts of southern Queensland.
Last year, the NSW Government awarded a 99-year lease of electricity transmitter TransGrid to a consortium comprising Canadian, Middle Eastern and local investors. The deal was worth $10.258 billion.