The AFR has the scoop on today’s AEMO update:
Australia is at risk of more blackouts next summer despite a raft of new initiatives from energy regulators and governments, according to the latest forecasts from the Australian Energy Market Operator.
The AEMO report to be released on Thursday also warned the looming gas shortage – which resulted in Prime Minister Malcolm Turnbull declaring an “energy crisis” in – could still occur if too much gas was exported overseas rather than diverted to the domestic gas market.
…AEMO toned down its March warning of a likely shortfall in gas to meet demand from power stations from the summer of 2018-19, but still cautioned that supply and demand “remain finely balanced, with continued risks of shortfalls”.The sober advice comes at a critical time for the gas industry because the AEMO outlook will be an important consideration for Resources Minister Matthew Canavan when deciding whether to impose LNG export controls under the controversial mechanism to be introduced by July 1.AEMO noted that with the return of the Swanbank E, Pelican Point and Tamar Valley gas generators, the expected amount of gas needed for electricity generation has increased by as much as 23 petajoules a year across the next five years, compared to its March outlook.
That points to about 183 petajoules of gas needed for power generation in 2017-18, which could not be met by supply if the Queensland LNG plants were producing flat out, the regulator said.
…The caution on the gas supply balance therefore looks unlikely to relieve the pressure for the LNG export controls, despite some exporters arguing they are unnecessary.
The return of some gas generators is in some part owing to the strategic drops of gas by the cartel into the retail market to ease pressure on the blackouts that are threatening its wider price gouge. It’s patently not enough when electricity prices remain at nosebleed levels and gas contracts are still going for $20GJ:
Gas sets the marginal cost of electricity owing to where it sits in the wholesale electricity market bid stack. See the AEMO description below:
To reduce electricity prices, we need cheaper gas to bring existing but idled gas generation online. If the Coalition were remotely serious about reducing power bills it would use its gas reservation mechanism pronto.
Force the cartel to heal.
