$2.4 billion. That’s roughly what Queensland’s state-owned Stanwell and CleanCo have between them committed to pumped hydro and firming capacity through the Queensland Energy and Jobs Plan, money raised against the state’s own balance sheet rather than a private sponsor’s. Meanwhile Akaysha Energy, backed by BlackRock’s infrastructure arm, has been building battery capacity across three states without a single dollar of state equity in the stack. Same grid, same five-minute dispatch engine, two completely different theories about who should own the machines that keep the lights on.
This argument has been running since privatisation swept through the National Electricity Market in the 1990s and it has never really settled. It just goes quiet for a decade and then comes roaring back when something breaks. Right now it’s back because Queensland and Victoria have both put public ownership at the centre of their transition plans, while NSW and South Australia still lean almost entirely on private capital to build what AEMO’s Integrated System Plan says the grid needs. Worth actually weighing the two models side by side rather than picking a side on vibes.
The case for public ownership: patient money and political cover #
Governments can borrow more cheaply than almost anyone. A state Treasury raising debt for a pumped hydro scheme is paying a cost of capital that a private developer syndicating a project finance deal can only dream about. That matters enormously for an asset class like pumped hydro, which front-loads enormous capital cost for a payoff stretched across sixty or eighty years. Borumba, the Queensland government’s 2GW pumped hydro project out near Gympie, only makes sense as a long-dated public asset. No private sponsor is underwriting an eighty-year amortisation schedule off a merchant electricity price curve. Our coverage of Borumba’s cost and timeline makes that plain: the economics only work if someone with a hundred-year balance sheet and no shareholders demanding quarterly returns is willing to carry it.
There’s also the political cover argument, and it’s not a small one. A state-owned generator can be directed to prioritise reliability over margin in a way an ASX-listed gentailer legally cannot. Queensland’s revival of public generation and Victoria’s reborn SEC both lean on this logic explicitly: the idea that the market alone won’t deliver firming fast enough, so the state needs its own hand on the lever. Victoria’s SEC revival is betting that a state-backed vehicle can move faster on offshore wind than a private developer waiting on bankable contracts. Whether that bet pays off is still an open question.
The case for private capital: discipline and speed, most of the time #
Private developers answer to a different master, and that master is impatient in a useful way. Capital that has to earn a return gets allocated where returns actually exist, which tends to mean faster decisions, tighter cost control, and projects that get mothballed the moment the numbers stop working rather than ten years after. Akaysha’s build-out across the NEM, profiled in our piece on the battery developer with no retail brand, has moved from financial close to grid connection on a timeline that most state-owned proponents would struggle to match. That’s not a coincidence. When BlackRock’s money is on the line, delay has a direct cost that gets managed hard.
Private ownership also spreads risk away from the taxpayer. If a merchant battery underperforms or a wind farm’s capacity factor disappoints, the loss sits with equity holders and lenders, not with the state budget. That’s the theory, anyway, and it mostly holds, though the Capacity Investment Scheme has quietly blurred this line by putting Commonwealth underwriting behind a lot of nominally private projects. Follow where the risk actually sits rather than who holds the equity certificate, and the public-private distinction gets fuzzier than either side likes to admit.
Where public ownership actually struggles #
Snowy Hydro is the cautionary tale everyone reaches for, and fairly so. Snowy 2.0 has run past $12 billion in cost and years beyond its original schedule, with a tunnel-boring machine famously stuck underground for extended stretches. That’s not a private-sector failure mode. It’s a public-ownership failure mode, because the usual commercial pressure to control cost overruns softens when the ultimate backstop is the Commonwealth government rather than a syndicate of lenders who’ll walk away. Governments rarely let a flagship project die, which is exactly why flagship projects blow out. Private sponsors go bankrupt. States get another budget allocation.
There’s a cricket parallel here, if you’ll indulge me for a sentence: a state-owned asset is a bit like a Test batsman who knows the selectors will never actually drop him. The incentive to grind out the hard overs disappears. Nobody is suggesting Snowy Hydro’s engineers haven’t worked hard on the tunnel. They plainly have, but the institutional pressure that forces private projects to confront bad news early is structurally weaker when the parent is a government rather than a bank syndicate.
Where private ownership actually struggles #
The private model has its own failure mode, and it’s arguably more dangerous because it’s quieter. Private capital walks away from assets that stop being profitable, even when the grid still needs them. That’s the entire story of the slow-motion exit from coal. AGL and EnergyAustralia are both gentailers managing the end of coal assets on commercial timelines set by shareholder return, not grid reliability: our piece on EnergyAustralia’s countdown to Yallourn’s exit captures how that tension plays out in practice, with closure dates moving around as the economics shift. A privately owned asset closes when it stops making money for its owner, not necessarily when the system has a replacement ready. Eraring’s closure date sliding from 2025 to 2027, covered in our piece on how 2025 became 2027, is really a story about the gap between commercial logic and system logic, and NSW Treasury had to step in with a support deal to keep it open at all.
Private capital also chases the asset class with the best near-term return rather than the one the system most needs. AEMO and the AER have both flagged, in various forms, that merchant investment tends to cluster around batteries and grid-scale solar because the revenue stack is better understood, while longer-duration firming gets underbuilt. Our piece on whether big batteries are being built for the wrong job goes into this in more detail: the market signal and the system need aren’t always the same signal.
The hybrid reality nobody wants to call a hybrid #
Pure public and pure private ownership are both becoming rarer than the political rhetoric suggests. The Capacity Investment Scheme is the clearest example: it’s a Commonwealth-backed revenue underwrite sitting underneath nominally private developers, which means taxpayers are carrying downside risk on projects they don’t own and won’t see upside from if prices spike. Is that public ownership? Not on paper. Does it function a lot like a state guarantee? Pretty much. Our explainer on whether the scheme is quietly picking winners digs into who actually benefits when the government underwrites merchant risk without taking an equity stake.
Queensland runs the opposite hybrid – Stanwell and CleanCo are fully state-owned, but they still contract private EPC firms, private engineering talent and private supply chains to actually build the hardware. The ownership of the balance sheet is public; almost everything downstream of that is private. Our coverage of Queensland’s energy plan and pumped hydro public ownership walks through how much of this is really about risk allocation rather than ideology, whatever the press releases say.
Where I land on this #
Here’s my actual read, for what it’s worth. Public ownership is the right tool for assets with payoffs too long and too lumpy for private capital to underwrite sensibly – long-duration pumped hydro is the clean example, and I think Queensland’s logic on Borumba is sound even if the execution risk is real. But for anything with a revenue stack that markets can price reasonably well (batteries, wind, grid-scale solar) private capital builds faster and kills bad projects earlier, and that discipline is worth more to the system than people give it credit for.
The mistake both sides make is treating this as an all-or-nothing contest. Victoria’s SEC and Queensland’s state-owned generators aren’t going to replace the AEMC’s market design, and private gentailers aren’t going to voluntarily build eighty-year assets with no clear revenue model. The sensible position, and I’ll admit it’s not a satisfying headline, is that Australia needs both models running in parallel, with clearer rules about who actually carries the risk when either one underperforms. Right now that line is blurrier than either camp wants to concede, and the Capacity Investment Scheme has made it blurrier still. Worth watching which government is still willing to call that out once the next cost overrun lands on a front page.
– Marcus Wren, Editor
Photo by Thomas Despeyroux on Unsplash