How coal and gas have blown up the power market in Queensland

How coal and gas have blown up the power market in Queensland

The Queensland government earlier this week was proud of another large wind farm deal – this time for the 230MW Banana Range project near Gladstone – saying it brought the number of committed wind and solar projects in the state to more than 50.

The problem is that despite the Labor government’s 50 per cent renewable energy target for 2030, the deployment of wind and solar power in the Deep North has been too slow.

Queensland has the lowest share of renewables of any state on the main grid. It has reached just 20 per cent in the past 12 months, compared to 25 per cent in New South Wales, 35 per cent in Victoria and about 65 per cent in South Australia. Tasmania at 100 per cent.

Because of its reliance on coal and gas, Queensland is the most exposed to the global rise in fossil fuel prices, and consumers are on the cusp of paying a heavy price for the rise in wholesale electricity prices that are being attached directly to the cost of coal and gas generation.

The Australian energy market operator points to a “north side” split on electricity prices – the premium paid for energy in NSW and Queensland due to their greater reliance on coal and gas, and lower prices in southern states with more renewable energy.

NSW has a plan to address this problem and has put in place a detailed transition program to ensure it has enough wind, solar and storage capacity to replace most, if not all, coal plants expected to close in the next decade. Queensland has a target (50 per cent by 2030), but no plan.

The Australian energy regulator has now reinforced the presence of that split on the north side, noting in its newly released quarterly analysis of the wholesale market that prices in Queensland quadrupled in the March quarter to an average of $171/MWh.

AER says it nearly doubled again to an average of $283/MWh from April 1 through May 15, and market data shows prices have risen further since then.

Why would that be? The answer is with the AER.

It says coal and black gas generators have dominated pricing in the market. The price set by coal generators jumped 50 percent from the same quarter last year to an average of $114/MWh, and the price set by gas generators jumped 10-fold to an average of $370/MWh.

Source: AER. Please click to expand.

This is an amazing number. Even hydro generators got greedy in the new market conditions and raised their asking price to a record average of $152/MWh.

Only wind and solar power provided any moderation, but the country does not have enough of these generators, despite record wind and solar production in the first quarter, and the price is rarely set (see table above).

The problems of rising coal and gas prices in Queensland are exacerbated by regular outages. The Callide C coal generator that blew out last year is still being repaired—incredibly, it’s been replaced by a new coal unit—while, ironically, the unusual weather is also wreaking havoc on coal supplies.

The AER says flooding in southern Queensland and northern New South Wales may contribute to higher bid prices. As an example, the report points to how trucks were required to move coal from the Clyde mine to the Millmaran power plant to address a coal supply shortfall.

Furthermore, Queensland became a net importer for the first time, because prices were lower south of the border.

The last irony? Queensland – despite the extraordinary results for the Greens in the inner city of Brisbane, where they may have captured as many as three seats from the LNP and Labor – is home to most of the climate deniers and tech troglodytes in the LNP that have kept Australia’s energy and climate ransom policy for the past decade and more. .

If businesses and families in Queensland want to know who to thank for their rising energy bills and the appalling state of the electricity market, they don’t have to look far, as the LNP is still calling for new coal-fired generators and smearing their faces in coal dust.

This does not mean that the government’s Labor Party should be excused. They were way to complacency and too slow to act, focusing more on press ads and pictures than on actually doing things.

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