It defies sense that one of the world’s largest exporters of liquefied natural gas (LNG) and coal is having trouble keeping the lights on at home, yet that is Australia’s current situation.
The country’s National Electricity Market (NEM), which covers the more populous eastern states but not the more isolated Western Australia state or the Northern Territory, has so far escaped widespread power shortages.
But, with outages at coal-fired power facilities, high spot natural gas prices, seasonally decreased solar production, and a frigid start to winter, this is more likely a question of luck.
The problem is significantly more complicated than different politicians, business interest organizations, and analysts would have you believe, as is frequently the case.
There are various degrees of failure at work, the most serious of which is a lack of coordination between the federal and state governments on national energy policy, resulting in a lack of investment in the power industry.
The conservative Liberal-National coalition government, which ruled at the federal level for nine years before being defeated by the center-left Labor Party in last month’s general election, bears a large share of the blame.
The previous government was widely perceived as being in the pocket of the fossil fuel lobby, even touting a “gas-led recovery” from the COVID-19 pandemic, which resulted only in approval to build a gas-fired power station in New South Wales state that energy analysts said was unnecessary and would be economically uncompetitive to operate.
If Australia is to accomplish the twin aims of dependable and inexpensive power while also decarbonizing its present coal-dominated generating system, it’s worth considering what won’t happen, what’s likely to happen, and what should happen.
What Australia will not do is develop new coal-fired or nuclear power facilities.
This proposal has received a lot of media attention, however they are just talking points from conservative lawmakers who did little to push this goal during their nine years in office.
What will happen is that Australians will vote with their wallets and install even more domestic solar and batteries in an effort to reduce energy prices, which have climbed by more than 20% in certain parts of the NEM this year.
While this may assist to reduce home prices, it will exacerbate grid management issues, since solar without battery storage implies surplus generation during the day and inadequate energy at night, or during lengthy periods of gloomy weather, as can happen in the winter.
This is where the new government may step in, either directly subsidizing household batteries or collaborating with state governments to guarantee that customers have adequate incentives to add storage to their solar systems.
The federal and state governments can also take steps to increase incentives for utilities to deploy grid-scale batteries and develop additional wind farms to supplement solar power when it is in short supply.
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