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Government says no ‘easy fix’ to rising energy prices

Energy ministers are focused on providing immediate action to address the current pricing challenges but acknowledge there is no easy fix long term.

9 June 2022 

Australian governments have agreed to set up a new gas storage reserve, proceed with plans to build up spare electricity capacity, and develop a national transition plan to reduce greenhouse gases.

The changes were part of the 11 agreements reached during the first meeting of energy ministers since the election of the Albanese federal government.

Energy ministers acknowledged the current challenges facing the energy market were significant and the situation was complex and might change quickly.

While there is no silver bullet to resolve the current and varied issues, energy ministers noted that actions have already been taken by industry and market bodies, including the Australian Energy Market Operator (AEMO) invoking the Gas Supply Guarantee to increase gas flows from Queensland LNG producers to domestic markets.

The Minister for Climate Change and Energy, Chris Bowen, said there was no easy fix this year. 

“We’ve been very clear about that, and one meeting isn’t going to solve all the problems of nine years of lack of energy policy,” he told ABC radio.

“But we have some meaty issues to discuss, some issues around powers of regulators, some issues around information, and some issues that I will be putting forward about better planning and better integration of the massive investment we need to avoid this problem into the future.

“I’ve been in constant contact with my state and territory colleagues since I was sworn in last Wednesday, and it’s not just one meeting; we’ve been making progress all week and no doubt we’ll continue to talk about the issues today in the lead up to the meeting.”

The energy ministers agreed that governments across all states must be ready to act to implement further measures should they be deemed consistent with both our domestic and international commitments. 

In the meeting, all relevant energy ministers said they would continue working with industry to ensure sufficient gas and black coal was provided in the near term to the domestic market, including working with relevant state rail authorities to secure access to domestic black coal supply, and with power station operators to get generation back online as quickly as possible.

The meeting recognised that large amounts of clean generation, storage and transmission were required and agreed that senior officers would collaborate and report back to energy ministers on the potential for the aggregation of renewable energy and storage projects across the nation. 

This would help identify significant supply chain and onshoring opportunities for manufacturing, minerals processing, and to manage global equipment supply and cost issues.

It was also agreed to advance the work on a capacity mechanism as a priority to bring on renewables and storage to support stability for the national energy market.

Further to these joint actions, the ACCC, as part of its ongoing Inquiry into the National Electricity Market, will report back to energy ministers in July. At this time, the Australian Energy Regulator (AER) will also provide initial views on recent market dynamics, with a particular focus on matters including bidding behaviour and the ability of generators to access gas and coal on reasonable terms. 

While the focus of the meeting was on the current pricing challenges, energy ministers reinforced the critical importance of a sensible, considered reform agenda for the medium to longer-term, to position the sector to be more resilient and able to navigate future global or domestic challenges to ensure a secure energy sector that would underpin a modern and low carbon economy, including hydrogen. 

Mr Bowen said there needed to be more investment in storage and transmission and renewables as part of Australia’s future energy transition.

“This is really what’s caused this problem – that we haven’t had the investment we need in renewables and transmission and storage over the last few years,” he said.

“We’ve had a 17% reduction in renewables investment. We’re way underdone on transmission. As AEMO, our energy regulator, has said, we need 10,000 kilometres of new transmission lines, and we need nine times the amount of utility-scale renewables to make the system more stable. 

"The system is unstable. That’s why we are so ill-prepared for this crisis that we’re facing that there just hasn’t been an effort to do any of those things.”

“We’ve had the chopping and changing of energy policies. We haven’t had the investment in transmission. There’s no transition without transmission. That’s what our Rewiring the Nation policy is all about. It’s more important to make this transition to 82% renewables and to get the renewable energy from where it’s generated to where it will be consumed.”    

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