A funny thing happened on the way to the market. The government picked a winner, and everybody clapped as the losers left the room. But the electricity prices doubled, and unpredictable brutal price spikes started to happen (forty times a month). Then the real free market (or what was left of it) reacted — traders started to game the system, and the investors start to back away. Welcome to Queensland.
But dire news for everyone:
Australia passes a ‘tipping’ point in energy crisis
There is an energy crisis in the world’s largest exporter of coal, the second largest exporter of gas and a major exporter of uranium. We need real solutions. Unless we make decisions really quickly, and I mean in the next 12 months, that re-establish base load capacity then we have no chance of sustaining the economy in the shape that it is in now. — Financial Review
“In the end the market will work its way to balance,” Freyberg continued. “It will stabilise – but the wrong way and for the wrong reason. The inability to secure affordable base load supply means that the problem will befixed by demand destruction.
Ouchy prices….?
In January, while other state markets circled averages of $80/MWh, the Queensland average was $197.65/MWh.
Nonetheless, many major industrial customers continue to maintain that Queensland’s state-owned generators have been acting with enriching but perilous opportunism in pushing prices to the regulated ceiling when demand is high.
It is understood that Glencore recently stopped importing copper anode to support cathode production at its Townsville plant because of those surging power prices. And the company is said to have baulked at investing something less than $50 million in a re-lining of its Mt Isa copper smelter because of uncertainty over the availability and price of gas.
-H/t Eric Worrall