Australia’s Wholesale Electricity Prices Soar Despite Morrison Government’s Budget Claims | Energy
Wholesale electricity costs in Australia are soaring, with prices for most of the national electricity market at double the rate promoted by the Morrison government in last month’s budget.
April prices are forecast at $175 per megawatt hour in Queensland, the most among the main east coast states, ASX futures data shows. New South Wales is not far behind at $173/MWh, while South Australia at $150 and Victoria just above $100.
The prices – which are a factor affecting household electricity bills – are at odds with claims by the Morrison government as recently as last month federal budget that he had lowered the price of electricity.
“The government is delivering on its commitment to a secure, affordable and reliable supply of energy and has met its target of wholesale electricity prices below $70/MWh,” the budget states. “Government actions have helped reduce residential electricity costs by 8% and small business costs by 10% over the past two fiscal years.
Guardian Australia has contacted Energy Minister Angus Taylor for comment.
Labor Party energy spokesman Chris Bowen said: “It’s no wonder wholesale prices are double what the Coalition has promised.
“Renewable energy with storage is the cheapest form of reliable energy, and with Barnaby Joyce returning to managing Liberal climate and energy policy, new large-scale renewable investment has plummeted,” he said. -he declares.
“Labor’s Powering Australia plan will see cheap and reliable electricity pumped through the Australian grid. It’s the cornerstone of a strong economy,” Bowen said.
The managing director of consultancy EnergyQuest, Graeme Bethune, said the surge in electricity prices was partly caused by the curtailment of output from coal-fired power plants. To fill the void, generators used more gas, but this resulted in a sharp increase in cost following Russia’s invasion of Ukraine, which disrupted global energy markets.
Coal-fired electricity was at an all time high for this time of year since the national electricity market was established nearly a quarter of a century ago. Generation was down 342 gigawatt hours, with coal’s market share down to 62% from 66% a year earlier, he said.
“[I]In the middle of last year, explosions at the Callide power station in Queensland destroyed half of it,” Bethune said. Coal-fired power stations were again in trouble, with Liddell in the Hunter Valley officially closing one of its four units on April 1 and two of Yallourn’s four units offline in Victoria.
“Certainly based on [those developments]the immediate outlook is certainly that high prices will continue,” he said.
Prices were “completely hostage, especially to what’s going on with coal-fired generators,” Bethune said. “If all goes well…and they all work, then you have less of a problem than if they start falling apart.”
Short-term gas prices continued to rise for domestic users, rising 12% in Brisbane last month to $11.37 per gigajoule, EnergyQuest said. Southern gas prices rose 11.7% to $10.98/GJ.
Australia-based gas producers, meanwhile, had shown few signs of increasing production. This is despite Resources Minister Keith Pitt saying in January that Australia “stands ready to meet any requests for additional supplies” should Russia invade Ukraine.
According to EnergyQuest, Australian projects shipped 6.41 million tonnes of liquefied natural gas in 94 shipments last month, almost the same as the 6.42 million tonnes shipped in February.
The consultancy estimates that Australian LNG export revenues fell slightly in March to $5.47 billion, from $5.63 billion in February, but 88% more than in March 2021.
However, signs that Australia may be able to ship more gas to Europe are mounting.
On the one hand, China increased local coal and gas production in the March quarter in response to higher prices, Bloomberg reported on Monday.
Sinopec, which owns a quarter of Australia Pacific’s LNG plant in Queensland, is also reporting falling demand for LNG shipments from Australia, in part because Covid disruptions are dampening orders. Chinese customers.
“Their trading arm apparently offered four spot shipments for Europe,” Bethune said. “With high prices on the one hand and also with the Covid lockdowns, activity in China has plummeted, and now they find they have more gas than they need.”
Bethune said governments had limited room to intervene on local electricity or gas prices, unlike fuel prices where the Morrison government halved excise duty on fuel for six months , reducing the price of the liter by 22 cents in a single gesture.
One likely outcome is that households and business users would face large fluctuations in gas and electricity prices for some time, he said.
“A conclusion on energy prices is [they are] extremely volatile and highly uncertain,” Bethune said.