At a function attended by Caravan Industry Association of Australia, Josh Frydenberg MP, Minister for the Environment and Energy confidently predicted that energy prices would come down in the next two years with the ACCC reporting contract prices for large customers already falling by up to 50 percent.
Addressing an Australian Chamber of Commerce and Industry forum the Minister was left in no doubt that rising energy costs continue to be a key concern for all Australians, including for businesses such as those in the Caravan Industry.
The Minister for the Environment and Energy said although power prices were still too high, a record wave of 6000 megawatts of new generation would be coming online, putting downward pressure on prices.
Explaining that one petajoule of gas is enough to supply a regional centre like Warrnambool or Wollongong for a year, Minster Frydenberg said an additional 70 petajoules of gas, which would have otherwise gone offshore, had also made its way to the domestic market. He predicted that implementation of the National Energy Guarantee would also have a significant impact on wholesale market prices.
In his remarks, Minister Frydenberg acknowledged that a failure of ten years of energy policy had led to the situation where over the past decade, Australia moved from having some of the lowest to some of the highest energy costs in the OECD.
Price rises resulted from older coal fired and gas power stations coming to the end of their natural lives and being predominately replaced by renewables which were supported by subsidies under the Renewable Energy Target. In this investment climate where there was a lack of certainty for dispatchable power, negative impacts on supply resulted from campaigns such as ‘Lock the Gate’ and technological change.
Minister Frydenberg said that disruption was the byword for energy markets today and explained that there were more people in Australia on a per capita basis with solar panels on their roofs than in any other country.
He recognised that Australians were understandably perplexed about rising energy prices when they knew that Australia had 200 years reserves of coal and was soon to be the largest global producer of LNG.
However, he said many people do not understand the need for dispatchable power in order to avoid situations such as the blackouts which occurred in South Australia in the past.
The Minister pointed out that wind power was available 35% and Solar 25% of the time, with dispatchable power required for the periods when the wind didn’t blow and the sun doesn’t shine.
“Dispatchable power can provided on demand, when and where it is needed. While it can come from a variety of sources, including gas, hydro, pumpedhydro, biomass and batteries, traditionally Australia has relied on coal-fired power stations to underpin the reliability of its system.” 1
The government’s commitment to Snowy Hydro 2.0 would therefore help to make renewables reliable, reduce volatility in the electricity market and help to bring down rising electricity costs for businesses and consumers alike.
He said the Federal Government’s National Energy Guarantee (the NEG) would ensure that Australians would have a reliable energy system and was designed to cut electricity prices by:
• ending subsidies for energy, which are passed on to all customers;
• creating a level playing field that ensures all types of energy are part of Australia’s mix;
• providing certainty for investors – more certainty will mean more supply and, in turn, lower prices; and
• reducing volatility, by ensuring reliable energy sources which provide power when it’s needed; while enabling Australia to meet its Paris Climate emissions reduction targets.
Josh Frydenberg ended a robust discussion by saying that Australian governments at all levels needed to get behind the national energy guarantee as Australia’s pathway to a more reliable and affordable energy system.
1 www.theaustralian.com.au/opinion/liddell-is-a-loss-but-energy-guarantee-would-light-the-way-1 forward/news-story/d4604b65dc5316e3bc86e5a0df22465d