Australia needs a public energy builder, not another bailout

On 3 June 2026, Michael Wright, Secretary of the Electrical Trades Union, and Alison Pennington, Chief Economist at the McKell Institute, addressed the National Press Club in Canberra to argue for a new Commonwealth entity — Sovereign Power — that would build, own, and operate renewable generation assets to supply Australian industry at cost.

The address was not a campaign launch so much as a diagnosis with a prescription attached. Wright opened with the workers: James from Collie, Kurt and Joseph from Whyalla Steelworks; tradespeople whose jobs sit squarely in the middle of an energy market that, in his words, “just isn’t right for the job.”

The problem they’re naming

Australia’s coal and gas-fired power plants are ageing out. They are kept running by union members working under increasingly difficult conditions, but they will not produce energy much longer. The generation gap they leave is arriving at exactly the moment demand is climbing: EVs, electrified rail, industrial heating, data centres, and AI infrastructure are all drawing on the grid. Wright put this plainly — Australia is not building to 82% renewables, or even 100%. Once fossil fuel substitution across transport, industry and heating is accounted for, the effective build target is something like 700% of the current grid.

That demand surge is colliding with a private investment market that is not moving fast enough, at the right price, or on the right time horizons. Power purchase agreements from legacy generators are expiring, and industry is finding no replacement contracts on offer. Pennington cited the consequence: Australian heavy industry pays roughly three times more for energy than US competitors. Five key industrial sites have required government bailouts in three years because the market could not supply them with long-term, competitively priced power.

Foreign governments — China, Saudi Arabia, Qatar, Thailand, Malaysia, Singapore — now own more of Australia’s renewable generation capacity than the Australian federal government does.

What Sovereign Power would do

The proposal is a new Commonwealth entity, funded by direct equity injection, that builds and owns renewable generation projects and sells electricity to eligible industries at cost, not at a profit-seeking market rate.

The financial logic rests on borrowing costs. Where private developers carry a weighted average cost of capital of around 7% in real terms, the Commonwealth borrows at roughly a third less. On a $23 billion investment, Pennington estimated that gap translates to around $19 billion in avoided capital costs over a project’s life. That saving is what allows Sovereign Power to offer electricity at approximately $65 per megawatt hour against a market average of $117.

Contracts would run 15 to 25 years, long enough for industry to plan capital investment, hire, train, and expand rather than wait out rolling uncertainty. Eligible industries track the Future Made in Australia strategic industries list: green metals, critical minerals processing, green hydrogen, low-carbon fuels. Data centres are explicitly excluded, consistent with current federal and state government positions that data centre operators should add generation capacity rather than draw on subsidised supply.

Because Sovereign Power assets sit on the public balance sheet as equity, not debt financing, the entity does not register in the underlying cash balance the same way recurrent spending does. Pennington described it as building public wealth, an asset that recovers its costs and could, over time, return a small surplus to the budget.

The entity would also free up grid capacity by carving off energy-intensive industrial loads, which in turn reduces competition between smelters and households and puts downward pressure on broader electricity prices.

The historical parallel

Pennington drew from postwar economic history to frame the proposal. Nugget Coombs, appointed to lead postwar reconstruction under Curtin, responded to trade disruption and inflation by treating the crisis as an opening to build new economic architecture. The state electricity commissions that followed delivered some of the lowest industrial and household electricity prices in the developed world for most of the twentieth century. The joint coal board established under Bill McKell — for whom the McKell Institute is named — powered industrial expansion.

Wright made the same point without the historical apparatus: Tomago aluminium is in the Hunter Valley because public energy put it there. Most competitor nations, including parts of the US, the UK, Canada, New Zealand, and across Europe, still run heavy industry on low-cost public power. Australia’s heavy industry is paying a price for the choice to privatise and deregulate that its competitors did not make.

Questions the address had to answer

Tom Connell pressed on efficiency. The standard argument against public ownership is that private operators are leaner. Wright’s response was direct: solar panels and modular batteries do not carry the engineering complexity of a hydro tunnel through a mountain. Operation costs are near zero once built. Private ownership does not change the weather, and the historical efficiency arguments against public delivery do not straightforwardly apply to generation assets with vanishing marginal operating costs.

On the budget question, whether at-cost power means the government absorbs any shortfall, Pennington clarified that the entity is designed for cost recovery, not subsidy. The price difference comes from cheaper public borrowing, not from taxpayers making up a gap. The asset sits on the public books and earns back what it costs.

Wright also addressed the social licence question around infrastructure deployment in regional areas. Polling data his team has seen shows community opposition in regions is lower when infrastructure is publicly owned; when communities believe the sacrifice of land and landscape returns something to them and to the country. He was careful to note that Sovereign Power is not meant to replace private investment; the energy build required is large enough that public and private generation are additive, not competing.

Skills, and what wasn’t in the speech

Wright said the ETU agonised over whether to pitch sovereign power or skills at the press club. They chose sovereign power. The skills crisis, though, kept surfacing. There is currently a projected shortfall of 42,500 electricians by 2030, and by 2050 total labour shortages in the electrical trades could exceed 100,000. Electrical apprenticeship enrolments have fallen year on year since 2022. Wright named the housing agenda, the energy transition, the defence build, and the Brisbane 2032 Olympics as concurrent demands on a workforce that is already short.

Sovereign Power is partly an answer to this because it enables sequencing. A four-year apprenticeship cannot be completed on a two-year project. A public entity with a continuous pipeline of work (project to project, region to region) provides the continuity that private contracts on fixed timelines do not.

The political path

Wright confirmed the proposal has been shared with the government. He was measured about the response: receptive, but not a guarantee. The ETU plans to take it to the ALP National Conference in Adelaide in July, alongside a resolution on fixing the skills crisis.

What they’re asking for

The proposal does not require new money so much as redirected purpose. Using existing mechanisms, like the National Reconstruction Fund as well as Future Made in Australia funding, and reorienting them toward publicly owned generation rather than crowding-in private capital is the practical ask. That would require a change to the NRF’s investment mandate.

The framing Wright returned to throughout was simple: Australia has the resources, the skills, and the institutional capacity. Electricity is the missing input. Without it, heavy industry limps between bailouts. With it, the industrial base (aluminium, steel, copper, lithium processing) can invest, hire, and expand on something firmer than a short-term contract.

Whether that argument lands at national conference in July, or eventually through the pressure of circumstance, Wright said he believes the government will eventually have to act. The alternative is managing a slow contraction of industrial capability with no clear floor.