Gas exports are driving up Australia’s power price spikes

South Australians have seen huge increases in their electricity bills, but it wasn’t because of renewables or wind turbines, he writes David McIlveen.

SOUTH AUSTRALIA experienced an extraordinary heatwave in January and along with heat stress, evening energy demand and electricity costs for South Australians rose sharply with the temperature.

Murdoch media jumped into South Australia, never missing an opportunity to fuel renewable energy alarm and spread disinformation.

Some “energy commentators” on Sky News sarcastically commented:

“It was their mistake to build so many wind turbines!”

It’s a familiar claim in the discredited, compromised trade press: Contrary to all evidence and even intuition, renewables are secretly too expensive. Ideologically minded groups and individuals will never miss an opportunity to blame renewable energies for their electricity bills, but belittling and tilting at windmills only goes so far. If you listen to the trade press, you won’t get the full picture, or particularly the right one.

But the situation in South Australia raises a very reasonable question: How are electricity prices rising so high when there is such abundance of low-cost renewable energy in the state, and increasingly in other states?

Context provided by Giles Parkinson don’t write inside Renew the Economyis a good starting point. But furthermore, non-expert overpaid people in the trade media would do well to remember that the price of electricity in Australia is closely related to the export price of gas (in all states, including South Australia, despite renewables, the situation is slightly different, except WA). This is something that is often overlooked, skipped, or deliberately ignored. And it shouldn’t.

To understand how gas drives up electricity prices, the Institute for Energy Economics and Financial Analysis (IEEFA) explains:

Historically, research has shown that as gas prices rise, so do electricity prices. Gas is one of the most expensive forms of electricity generation on the market. The cost of gas has a disproportionate impact on electricity prices because the bidding behavior of gas generators affects other generators.

In fact, researchers at Griffith University to create He said gas prices directly and indirectly affected 50-90% of pricing periods in the NEM (National Electricity Market) from 2012 to 2021.

Link: Gas generators often act as “marginal generators” that determine the spot price of electricity. When gas prices rise due to high international LNG export prices, electricity prices follow, regardless of the underlying supply-demand balance.

…The introduction of LNG exports in Queensland over the last decade has led to increased domestic gas prices, leading to a 73% increase in average wholesale electricity prices.

The price of gas therefore serves as a significant driver of wholesale electricity costs in Australia. The mechanisms behind this are a bit complex but there are good explainers available online (find a detailed explanation here). One From the RBA website, which shows how the national electricity market works), we have seen AEMO and its related poor policy decisions in the past lead to us paying through the nose (“export price parity”) a few multinational, foreign-owned companies for our own gas and therefore electricity.

This article An episode from the ABC aired in December last year provides insight into his policy history. (And Here Martin Ferguson joined gas lobby group APPEA in 2013, within 6 months of finishing his term as federal resources minister, and helped cancel any domestic gas reservations at the behest of the gas lobby.

It was a policy choice to let global gas markets effectively determine the price we pay for electricity. conclusion Political capture and the complicity of Australia’s commercial media (who over the years have uncritically published and promoted gas industry-sponsored articles, press releases and claims by gas industry PR representatives). We know that gas companies are some of the biggest donors to both major parties; They collectively donate hundreds of thousands of dollars per election cycle.

And this doesn’t just touch on power generation, retailers and network issues owners.

While the trade press is spreading disinformation and distracting the public with pointless debates about whether windmills are “waking up”, and while a bunch of idiots and yobos in Parliament think that fighting against solar panels and wind turbines is the greatest cultural and moral crusade of their lives, it seems that we have been priced inflated for over a decade by a gas cartel that has invested (“donated”) huge sums of money to the major parties and are being rewarded with a fantastic return. Investing the interests of the entire Australian economy to serve the interests of a handful of (mostly foreign-owned) multinational gas companies that supply gas to Asia ahead of Australia.

Besides higher energy bills for consumers, expensive energy, as we all know, has huge consequences on the economy; in particular, our ability to develop our increasingly important domestic production, refining and processing capacity, which has implications for our national security and even sovereignty. Woodside, Shell or Chevron don’t seem to care.

It pays to be relentlessly curious, skeptical and inquisitive, and never to trust the commercial media, which, as we know from long experience, cannot be trusted to prioritize public interests above private interests when it really matters.

David McIlveen studied science and environmental engineering at the University of Queensland and currently works as an environmental consultant in Brisbane.

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