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article imageOp-Ed: Why Australia, a big energy exporter, fears huge energy shortages

By Paul Wallis     Mar 20, 2017 in Business
Sydney - Ask any Australian about power shortages, and expect a very sincere groan. We export vast amounts of gas, coal, etc., and we’re worrying about whole states blacking out. This is a true cluster of mistakes.
The core issues with Australia’s power shortages are lengthy enough. Not enough capacity, in one of the world’s biggest power grids, doesn’t help. Spiralling increases in energy costs to businesses are hitting very hard indeed, including massive rises over the last few years.
Some background:
1. Australia used to have a big coal sourced energy system back in the 1960s, but that’s been progressively replaced with renewables. The last big coal powered station, Hazelwood in Victoria which produces about 5% of the nation’s power, is about to close. That’s even raised worries about manufacturers leaving Australia.
2. Power was state-owned; it was relatively cheap. Australia didn’t have the capital for a privatised market. The introduction of the “free market” and privatization have done what they always do; drive up prices and over complicate supply of basic needs. The degree of complexity is now such that we have private companies buying and selling blocks of power at nominal “savings” and the wholesale rates, of course, have gone up.
3. We export gigantic quantities of gas, but we don’t reserve some of it for domestic consumption, unlike just about every other country on Earth, including the US. Gas prices have skyrocketed as a result. The gas suppliers are also stuck with export contracts for the next 20 years. The choice, such as it is, is more production for the domestic market. That’s going to take time and cost big money.
4. Energy costs for homes have also gone out of control, thanks to some pretty iffy price rises. The energy suppliers wanted price increases, and got a staggered increase of 175% in New South Wales alone over a few years. The price increases were so bad I actually saw one woman in an electric wheelchair wondering if she’d be able to charge her wheelchair. It was pathetic, and so typical of the laissez-faire policy culture in Australia.
5. Prime Minister Malcolm Turnbull has advocated, with some good reason, the upgrade of the huge Snowy Mountains hydro scheme to deliver more capacity, with the additional capacity to power 500,000 homes.
If all of this sounds like it should be stunningly unnecessary, it is. Australia’s bad habit of mindlessly following other nations on policies and methods has really shown itself for the utter shambles it is.
The needs are:
Cost-viable energy for industry, businesses and consumers. Energy costs, like freight, add a lot of direct costs to everyone’s bottom line. Economically, it’s almost unbelievably inefficient.
Enough capacity to cover all scenarios; this means over-capacity in theory, but we’ve seen what under capacity can do.
Modernization: Australia could turn our methane (CH4) in to clean hydrogen power, with no emissions except water, and effectively ensure our energy needs forever.
The simple fact is that Australia has created a perfect example of how not to run a power supply market, and it’s costing us a fortune. Business overheads are ridiculous, and with an inflation rate of 2%, the price rises were nothing less than insane.
Several massive heatwaves during summer caused almost literal panic this year. With days, or in some cases weeks in 40C+ temperatures, the threats are real enough. The question is whether Australian governments are prepared to ditch their free market drivel and start focusing on what they’re paid for – Delivering the services the Australian public and Australian businesses need.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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