There is no end to Victoria’s disease when it comes to energy.
Victoria is doing OK on its renewables rollout, though it has slowed recently. The problem is the price it will pay for it.
Unlike other states, VIC and its capital, Megacity One, are gloomy places and will rely more on wind than sun.
This introduces greater volatility to prices and necessitates larger quantities of backup power from power storage and gas.
A permanent Labor government, another feature of Victoria disease, has been secretly subsidising loss-making coal power plants for years to prevent this from becoming an issue in the short term.
But, longer term, VIC’s reliance upon gas to offset dunkelflaute is going to grow.
That brings us to this. AFR.
A bid by aspiring LNG importer Viva Energy to secure access to a congested pipeline west of Melbourne threatens to slash the value of the country’s biggest gas storage plant, owned by Queensland Investment Corporation.
…Viva has told the energy market operator that unless it gets full access to the line, it may not proceed with its planned LNG import terminal at Geelong, potentially locking in damaging gas shortages and higher prices for homes and businesses in the state.
…In particular, the value of QIC-owned Lochard Energy’s Iona storage plant near Port Campbell, a critical piece of infrastructure needed to meet spiking gas demand in winter, would be cut if its access to the grid is reduced, said Josh Stabler, managing director of adviser Energy Edge.
Of course, Viva wants a gas monopoly in the western approaches to Megacity One! VIC is probably stupid enough to give it one, ratcheting up the margins charged by the importer.
As things stand today, Viva gas will land at $20Gj. Add a margin and transport, and we are looking at $23-25Gj gas delivered.
This is nearly double today’s gas price and will add 40% to power bills just as subsidies roll off. This is another severe household income shock.
It is obvious what VIC should be doing instead. Iona should be doubled and tripled in size, and cheap, reserved QLD gas should be stored in the off-season.
The problem is that Victoria disease has spread north to Canberra, where a one-party Labor government refuses to make tough decisions on energy, such as taking down the QLD gas export cartel.
And so Victoria disease feeds upon itself in its birthplace, and its denizens will soon be paying the highest electricity prices in the land, on par with the great energy paupers of the developed world.
Yet this stunning policy failure, and the economic hollowing out that comes with it, only increases the reliance upon immigration to grow the economy and lifts the Labor vote with it.
It is some form of mad Stockholm Syndrome doom loop.
