Back to News

A Government Struggling to Govern Through An Energy Crisis

The Australian Financial Review reported today that not only have the generators sold too much gas overseas to satisfy domestic demand but now coal appears to be in shortage, which could push the cost of raw power ever higher.

Coal-fired generators like AGL’s Bayswater and Liddell plants are struggling to find enough thermal coal, and even if they can, they cannot find enough rail slots to bring it to the furnaces. This comes at a time when the government is attempting to shift its priorities from clean energy towards more reliable base load power from low-emission coal-fired plants.

Government Energy Crisis_Header Image

The Australian reported yesterday that Energy Australia’s Mount Piper plant in NSW which has an operational life until 2042 was facing a real risk of closure following a green activist legal action over discharged water from the mine. This would be a nightmare for base load, as it’s another 15% of NSW power supply at risk. Energy Australia says they have a fix for discharged water, but it’s expensive.

We have no idea of the outcome of the court case, but we do know that all this creates further uncertainly in the national energy market which implies higher grid power prices.

So, the Hazelwood closure was supposed to see the supply short fall picked up by more generation in NSW, but it seems there is not enough coal to drive that output. With all the mining resources the country has to offer it seems there will be no respite from even higher power prices.

As the political comedy show continues, as Stan Laurel would say, “That’s another fine mess you’ve got us into!”

Meanwhile, as Malcolm Turnbull looks to try and secure base load power and prevent blackouts, Tony Abbott has warned he’ll cross the floor if the Coalition tries to legislate a clean energy target, with up to six backbenchers tipped to follow him.

“He has let the government know his position. He won’t vote for a clean energy target,” a government source told The Australian on Wednesday.

In an opinion piece, Mr Abbott argues the recommendation by the chief scientist for such a target should be ignored.

“It would be unconscionable for a government that was elected promising to scrap the carbon tax and to end Labor’s climate change obsessions to go down this path,” he writes.

AGL is also protesting about being asked to extend the life of its coal fired Liddell plant. As Shakespeare wrote in Hamlet, “the lady doth protest too much?”

Mr Abbott claims it is bordering on absurd that a country with the world’s largest readily available reserves of coal, gas and uranium should have some of the highest power prices on the planet. We would agree totally. Luckily, Australia also has an abundance of something the government can’t tax or reduce. Sunshine!

On Tuesday, Mr Abbott told 2GB the Turnbull government could send a strong signal to AGL by dumping all subsidies for renewable energy and encouraging coal-fired power.

With Australia facing a massive energy crisis, Mr Turnbull is pushing for AGL to keep ageing coal-fired Liddell Power Station open at enormous cost.

Labor leader Bill Shorten is ramping up his campaign for the greater use of gas in opposition to the Turnbull government’s support for old coal-fired power stations.

Grants under threat – Make power while the sun shines.

Commercial solar below 100kw relies on small scale technology certificates that provide a government grant of what was 30% of the project cost paid for by federal funding.

As the chart below shows, in June prices really started to collapse and continues to decline as more and more clients access the funding pool.

Daily Closing Spot

Source: Ecogeneration

It’s fair to say it’s been a busy year for solar installers, as business owners take matters into their own hands and invest in rooftop PV systems as a protest against steeply rising electricity costs.

For accredited installers that deal at the higher end of the market, its business as usual, but for smaller companies that offer bargain systems on a thin margin its business critical. As they struggle to keep their price low enough to appeal to the bargain hunters the real risk is that the close their doors and their phones go unanswered.

Ensure your solar energy provider has a diverse revenue stream from other power products, and their business model is not reliant on government funding alone.

Given the increasing popularity of commercial solar, it’s unlikely that grant values will bounce back from these lows. In January, STC’s will fall another 9% and we at Choice will have to cut our own assumptions of grant values in our quotations starting in November. (Outstanding proposals are fine for now. We stand by our assumptions of grant values.)

With talk of subsidies getting cut completely next year, this really is a good time to make hay while the sun shines.

Take back control of your energy

Speak to one of our Choice Energy Assessors for a free energy evaluation today!

Choice Rep Interactingwith Customer_Hi Res
Get Started

Take power back and reduce your energy costs. Provide us with a snapshot of your business and energy needs and we'll be in touch.