Gas and power markets collapse. Albanese Government next

Over the long weekend, the National Electricity Market followed the eastern gas market into failure:

The Australian Energy Market Operator has taken the unusual decision to impose a $300/MWh price cap on the Queensland electricity market, after cumulative prices over the past week averaged more than $674/MWh and exceeded a trigger point for the intervention.

The intervention by AEMO on the price settings is big news, because according to WattClarity it is the first time it has happened in the state, although it has happened in recent years in South Australia and earlier in Tasmania.

The price cap was due to expire at 0400 AEST on Monday, but AEMO announced it would be extended for another 24 hours because the trigger point of $1.359 million in accumulated costs remained breached. It’s likely to remain in place for another week.

NEM prices are out of control:

Versus recent years:

Remember that the historical price is closer to $25MWh.

As AEMO imposes power price caps without anybody doing anything about power fuel prices, the economics of electricity collapses because firms lose money pumping power. The result is NO POWER:

Queensland and NSW face possible blackouts on Tuesday after a cold snap pushed winter power demand to a fresh record high and prompted regulators to impose price controls on the states’ soaring wholesale electricity prices for the first time.

Queensland narrowly avoided a critical electricity supply shortfall on Monday evening as the energy crisis intensified after wholesale price controls were imposed on the northern state’s wholesale prices for the first time on Sunday evening under a cumulative price threshold mechanism.

All Albo’s cowards could do was blame the Coalition:

A spokesperson for Energy Minister Chris Bowen says a ripple effect of events, caused by the previous government’s lack of preparation, has contributed to Queensland and New South Wales’ electricity shortfalls.

The spokesperson said that Mr Bowen was in close contact with the Australian Energy Market Operator (AEMO) and Queensland energy minister Michael de Brenni as they work on a strategy to “minimise the risk of disruption”.

This is pure politics over national interest. Undoubtedly, the LNP has contributed a great deal to the crisis but it is still a CRISIS and we have a Labor government that refuses to act to resolve it.

We all know that Albo’s cowards are afraid of the resource extraction industries.  But what about every other Australian? It’s now openly obvious where this is going:

  • a $50bn energy income shock is going to land on the east coast economy;
  • the RBA has already said it will respond to these price rises by hiking higher and faster, as CPI is boosted by 5% or so over the next twelve months;
  • this is another $35bn in interest costs added to the income hit;
  • plus, house prices are going to crash roughly 20% for every 1% of cash rate hikes wiping out enormous household wealth and threatening the banking system.

Over the weekend, Energy  Minister Chris Bowen made clear he has no idea what he is doing, declaring no urgent interventions were needed at The Guardian.

Meanwhile, Resources Minister Mad King is captured by the miners:

“The gas companies quite rightly point out that some of the southern states should seek to free up some of their gas reserves that are proximate to the population and businesses demanding energy.

“As we seek to move to a decarbonised energy system, we are still going to be using gas and coal to keep us warm and manufacturing going.”

Santos chief executive Kevin Gallagher has urged states to speed up gas project approvals instead of imposing export controls, while highlighting that the controversial Narrabri coal seam project in NSW would not be completed until 2025 at the earliest after delays because of opposition from farmers and environmentalists.

Why is Mad King consorting with the cartel? NSW and VIC communities are unconvinced by the safety of terrestrial gas extraction. You can’t bully them out of it and trying will only make the anger worse.

One reason why Bovver Bowen and the Mad King are drowning is there is no leadership from the top. “Silly” Jim Chalmers is fiddling in his ivory tower. Albo is simply AWOL.

Now Macolm Turnbull has stepped into the breach:

Earlier, former prime minister Malcolm Turnbull called on the Albanese government to work with the states to impose export controls on gas.

Mr Turnbull said the LNG giants would quickly capitulate and find cheaper gas to solve the energy crisis in the eastern states.

“This will involve imposing force majeure on contracts,” he told ABC Radio on Monday.

“It’ll be resented bitterly by the industry … but we have a crisis at the moment, and hopefully, it won’t go on for too long.

“The minute they say they’re going to do it, the gas companies will find the gas … they will agree to offer it at lower prices.”

Mr Turnbull called on the government to work with the states and the National Energy Market to impose gas export volume and price controls for a period of 90 days.

“So in other words, make sure that all the gas we need is available here,” Mr Turnbull said.

Mr Turnbull said the last thing gas companies wanted was the precedent of imposing regulation.

“But unless you’re prepared to stare them down … we’ll have the situation where we have electricity prices or wholesale prices $400 a megawatt hour and higher,” he said.

It must be coal as well!

Unless Labor acts, the only other hope to end the crisis is that a collapsing global economy crashes energy prices but what kind of fix is that? And we’ll just see the problems return during the recovery.

Gas and coal export levies or domestic reservation is needed immediately or the entire eastern economy is toast.

Or, perhaps in terms that the ALP understands, if it does not act, it will lose power as surely as the NEM.

Houses and Holes
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Comments

  1. reusachtigeMEMBER

    Yeah, life won’t be easy under Albanese!

    Labor have really farkt this country!!!!

    • Well yes, energy prices too high and companies go out of business nice one. Already happened, manufacturing not just fertiliser production closed in Germany and UK since sanctions, mortgages so high people can’t eat and keep warm in other countries…it’s not just Aus. Extreme mortgages, extreme energy costs, economy falls and maybe that defeats commodity inflation we are having for next three years? Nice economics.

      • Jonathan Rubenstein

        well, the corporate double-speak for this is “load-shedding”

        However, “load-shedding” is also what happens in the final scene of an adult movie, so perhaps this is also offensive?

    • Ronin re Rolling Blackouts :
      The Snowy Scheme specifically the destruction of The Mighty Tumut River and beautiful Blowering Valley dammed for meathead water skiers went in to stop nightly blackouts because “we need the power for aluminium smelting”. Records matter.

  2. Verily, the teals will rise as one, and force the new LibLab Government to put mug punters ahead of big donors. Not.

  3. happy valleyMEMBER

    “Or, perhaps in terms that the ALP understands, if it does not act, it will lose power as surely as the NEM.”

    Albo had better not move too much of his gear in to The Lodge?

  4. “In the first three months of 2022, EnergyQuest estimated 23 per cent of gas was being used for power generation, up from less than 19 per cent a year earlier. The increased role for gas comes as many coal generators are offline due to faults and maintenance. About 25 per cent of coal generation remains offline, increasing demand for gas generation.”
    “The new Labor government has faced calls to exercise its ability to limit gas exports. Challenging the rationale for that, a report by EnergyQuest shows prices spiked despite supplies increasing in the first quarter of 2022. EnergyQuest estimates east coast supplies increased by 3.8 petajoules to 478.9 petajoules in the March quarter, compared to a year earlier. While there was a small increase in production, EnergyQuest said Australian gas exports have slowed in recent months. As prices spiked in March, April and May, gas production exceeded exports by 8.1 petajoules. EnergyQuest said while there was more gas available domestically, there was a significant increase in demand – particularly for power generation”

    Report from the FIN

  5. Now if only wind and solar were capable of producing power on a cold and still winters night. Investing in non-dispatchable power is an exercise in stupidity.

    • In the old days it was known that a bathtub full of water in the living room in front of the fire would keep the room warmer when the fire went out.

      I reckon a solar panel that heats a drum of water in the middle of a house would have the same effect. That would emit the heat during the cold still night.

      • Yep and that’s what I sort of have.
        The tanks are external and well insulated / buried but the water can circulate through the slab to warm or cool the whole house.
        Excess daytime solar runs a variable speed compressor / heat pump connected to the water storage tanks.
        20Kliters of 50C water keeps the whole house really warm.

        • bolstroodMEMBER

          That is the sort of thinking that we need .
          Good work, I think you need a new moniker as dodgy as no longer fits

        • Can you hear sea water?

          One if the things which really gets me is harvested, chlorinated water in this country is a valuable asset, due to its scarcity. We use what? 3 to 5 litres flush the toilet, it would make sense at these prices to reticulate a concurrent sea water source along the coast, which is most of the population.

          I’m sure we could instantly use it for toilets and probably showers, minor tech advancements for evaporative air conditioning, a particle membrane for washing clothes maybe? Extend this to swimming pools…

          Now, if we encourage ducted water for temperature control, we start to pile up the uses for sea water… leaving the fresh water for drinking and the garden. (maybe?)

          • Not sure I understand.
            The water in the tanks contains rust inhibitors and antifreeze so I’m not about to try drinking it nor am I going to swap it out for sea water.
            Sure I need to top up every so often but it’s like 1kL per year
            atm both tanks are configured as hot water tanks and the heat exchanger cools my swimming pool (which has the side advantage that the pool is so cold that algae simply can’t grow so no need for chlorination.
            As for putting sea water in the pool yeah nah nah nah. Typical so called salt water pools have salt concentrations of about 4000ppm whereas sea water is about 35000ppm. it’s almost an order of magnitude difference in salt concentration.

        • What sort of kit is able to run devices in a smart fashion only on free excess power?
          It would be useful for air circulation fans under houses.

      • bolstroodMEMBER

        Can I Play ?
        Tide and Wave, we have hardly even started looking at these inexhaustable energy sources

      • When you backup unreliables with days or weeks worth of full storage tho, they become too expensive. That’s why no one has done it.

        How many minutes worth of power does the 90 million dollar Tesla Big Battery in SA provide the state? 6 minutes I believe. How much more would the cost be to scale that up to a mere 12 hours of backup, to last a night where solar doesn’t produce and there’s little to no wind? It would take 120 Tesla Big Batteries. Just for SA.

  6. Diogenes the CynicMEMBER

    The example of WA means that they cannot say no other model is possible. They must make a decision to ease the crisis. It is it going to benefit the gas companies or Australians? If they are not careful the economy will plunge into depression and darkness, and then the pitchforks will emerge.

    • bolstroodMEMBER

      A large part of the problem is that Labor are just as enmeshed with the Gas industry as the LNP.
      Think Gary Gray in WA , Martin Ferguson , Eddie Obeid, Ian MacDonald in NSW.
      Labor supports the Fracking of the Northern Territory

      At the end of the day The question for the Australian people is

      Whose Bl00dy Gas is it ?

      • Whose Bl00dy Gas is it ?

        Not Australia’s.

        We couldn’t even defend keeping the nation ours, let along segments of its resources.

      • “Whose Bl00dy Gas is it ?”

        I need to do a run of tshirts with this important community message

  7. Piss weak from Labor. This is their Port Arthur moment – time to step up and define their time in power.

    • Exactly!
      Judging by the wormy school grade reply I received from my member’s useless mouthpiece – THEY DON”T have the TICKER! Maybe more precisely is the link from Johnathon Rubenstein above – They’re Already Owned, & of course it’s not of/for the People…..

  8. Ah yes Albo, it sure is the result of the coalition doing nothing for years and not you and your watermelon comrades spending years working the populace into hysteria over the prospect of building new coal-fired generators, or heaven forbid, nuclear reactors!
    Labor is in the process of being mugged by reality.
    Australia, the Lucky Country.

  9. I have said this before but just in case y’all didn’t think it through
    And as an homage to the Chinese way of handling diplomatically sensitive issues.
    Labour Govt should simply “not stop” the unions from blockading the port over suddenly discovered working condition issues

  10. The politics of this is that it wont be acted on until the prolls are screaming and Labour can brand this fiasco a gas industry made problem.

    Politicians dont lead. They just stand in front of the crowd which is choosing it’s own direction.

    Labour know their moves on this already. They are just waiting on the timing. It will tear the gas industry a new ar5eh0l3 when the time is right.