Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

First test for Australia’s new Government is an energy squeeze

© BloombergA view of a high voltage switchyard at Eraring Power Station in Eraring, New South Wales, Australia, on Thursday, April 28, 2022. At Eraring Power Station's cavernous turbine hall as much as 6 million tons of coal a year is crushed and loaded into furnaces which reach temperatures of 1,480 degrees Celsius (2,696 Fahrenheit) about enough to melt steel to heat 24-story high water-filled boilers. Photographer: Brendon Thorne/Bloomberg
A view of a high voltage switchyard at Eraring Power Station in Eraring, New South Wales, Australia, on Thursday, April 28, 2022. At Eraring Power Station's cavernous turbine hall as much as 6 million tons of coal a year is crushed and loaded into furnaces which reach temperatures of 1,480 degrees Celsius (2,696 Fahrenheit) about enough to melt steel to heat 24-story high water-filled boilers. Photographer: Brendon Thorne/Bloomberg

Australia’s new government, elected with a promise to accelerate a shift away from fossil fuels, is holding talks with oil and gas giants to ease an energy squeeze that’s delivered a first major test.

Officials are in discussions with companies on “how we can alleviate the immediate real pressure on businesses and households,” after gas prices surged and following warnings over some possible electricity outages, Prime Minister Anthony Albanese told ABC Radio Friday.

Perth-based Woodside Energy Group has been in contact with the government, while Adelaide-based Santos Ltd. said it has discussed the prospect of making some small near-term increases in domestic production.

The Australian Energy Market Operator, which manages gas and power markets, this week briefly imposed a rarely used limit on wholesale gas prices, warning of low reserves in the major urban centers in the east. Albanese, sworn in as leader on May 23, has pledged to increase adoption of renewables and to accelerate efforts to curb greenhouse gas emissions.

Australia generates most of its power using coal, and outages at some ageing facilities amid colder-than-usual weather have contributed to the squeeze. That boosted the need for backup gas plants amid increased international competition for the fuel because of the war in Ukraine and reluctance to buy fuel from top supplier Russia.

While there’s a shortage of fuel domestically, Australia remains one of the world’s largest exporters of liquefied natural gas (LNG). Output from giant LNG projects largely can’t be redirected for local use, because of a lack of necessary infrastructure and because a majority of the gas is already accounted for on long-term contracts.

Australian consultancy EnergyQuest sees the east coast energy price crisis as more an electricity crisis than a gas crisis. “Electricity demand has increased but coal generation has fallen due to coal outages and closures and problems with coal supply in New South Wales. Renewables have only been able to partially fill the gap so gas-use has jumped from supplying 6% of NEM generation in May 2021 to 9% in May 2022, with predictable gas price consequences,” Energy Quest said in a note.

“There has not been any big change in LNG exports. In May 2022 the east coast exported 1.98 million tonnes of LNG, down slightly from 2.07 Mt in April and the same as 1.98 Mt in May 2021,” added the firm.

Australia is also suffering from a lack of recent investment in renewables, Deputy Prime Minister Richard Marles said Friday on Channel Nine television. “We don’t have renewables online in the way we should,” he said. “We don’t have a grid that can accept them.” Albanese has pledged to spend about A$20 billion ($14.5 billion) to improve electricity infrastructure.

“Greater investment in renewables, coupled with a faster pace of electrification would shield energy users from volatile commodity prices,” said Will Edmonds, an analyst at BloombergNEF. “If elevated commodity prices continue, Australian businesses and energy users will suffer.”

Recommended for you

More from Energy Voice

Latest Posts