Federal and State Government agree to power bill

On Friday National cabinet met and agreed on the states introducing a cap on wholesale gas and coal. The temporary cap will be set at $12/GJ for gas and $125/t on coal. The caps will not enforce on export contracts therefore not limiting the opportunities on high international prices.

During the meeting it was agreed that the states would sort out the coal cap and the federal government would change laws to legislate the $12/GJ cap on domestic gas. As the caps are focused on the domestic market, they will only have a small impact on the profitability of producers. It is anticipated that only 4% of gas and 10% of coal will be affected by the cap, the remaining volumes will be exposed to international markets.

As the states have been tasked with implementing the cap it is likely they will go down different routes in achieving the same outcomes. The simplest state to implement the changes will be Queensland as the government still owns and control 80% of the coal fired generation fleet. Queensland will likely use its directive powers and instruct its government owned corporations (GOCs) to dispatch the coal assets below specific prices. NSW will likely use changes in law to cap the price for the state.

In line with the price caps, national cabinet also discussed an assistance package to lower the impact on families and business as a result of high inflation and high commodity prices.

The cap mechanism will be used for uncontracted gas and coal, this may have limited impacts on generators as the majority of coal and gas has already been produced under longer term contracts with strike price below the proposed caps.

At this stage it is unlikely that the mechanism will be in place until February despite federal politicians being recalled to Canberra on Thursday to discuss the issue. While the bill will get the support of the House of representatives it is expected the Greens will put pressure on the Government in the Senate to limit any compensation for the coal producers.

When the futures market opened on Monday morning it was evident the traders expect the caps to flow into the market. Both QLD and NSW futures dropped by $20/MWh for later dated quarters and over $30/MWh for Q123.

Edge2020 have an eye on the energy market, enabling us to support customer supply and demand agreements. Our clients rely on our experts to ensure they are informed, equipped, and ideally positioned to make the right decisions at the right time. If you could benefit from an expert eye on your energy portfolio, we’d love to meet you. Contact us on: 1800 334 336 or email: info@edge2020.com.au

Coal state leading the way to renewables

Last week in Queensland the weather was perfect. It was perfect for those at the beach during school holidays but also perfect for renewable energy.

As everyone in the NEM knows, Queensland is better known for its dominant coal generation, at times pumping out 80% of Queensland’s power supply. With the clear skies and just enough wind, Queensland became the renewable state.

Last week, Queensland’s demand was supplied by over 66% renewable energy. Solar was the largest contributor of renewable energy with wind coming in second.

Previously we have seen the state powered by 50% renewables but the 66% hurdle is a positive message for end users impacted by the reliability and behaviour of the thermal generators.

The Palaszczuk government announced their 10-year-energy plan which involved introducing two new pumped hydro mega-projects in regional Queensland and a green conversion of its coal-fired power generators. The Palaszczuk government also has recently announced upping the target of 50% renewable energy by 2030 to 70% by 2032.

Despite this increase in target, until recent years coal has remained dominant in Queensland. The government has all but ruled out the early retirement of any of the state-owned coal-fired power stations, following pressure from unions. Some could say the slow uptake in renewables is due to supply chain issues, registration, connection and construction delays while other may say it results from the government owning a significant portion of the existing thermal and non-thermal generation that is reaping high returns due to the spot and forward energy prices.

AEMO’s recent Integrated System Plan (ISP) shows the NEM will contain over 80% capacity coming from renewables by 2030. While the renewable industry in Queensland has been slow to grow recently more federal funding is being used to rewire the nation by connecting renewable energy zones (REZ) to end users. With the rewiring in place developers are less restricted in building and financing renewable projects and producing renewable energy.

Industry is also looking for renewable energy to meet their sustainability targets which leads to a market for new renewable projects. AEMO indicated there are thousands of MWs of renewable projects waiting to be built.

If Queensland followed the latest ISP, the state would require an additional 30GW of energy from renewable sources and the storage required to make it useful for end users when the sun does not shine, or the wind does not blow.

Today’s announcement by the premier outlined the $62B plan for Queensland energy and jobs. The plan includes:

  • 70% of Queensland’s energy supply from renewables by 2032
  • 80% of Queensland’s energy supply from renewables by 2035
  • Two new pumped hydros at Pioneer/Burdekin and Borumba Dam by 2035
  • A new Queensland SuperGrid connecting solar, wind, battery and hydrogen generators across the State
  • Unlocking 22GW of new renewable capacity – giving Queensland 8 times the current level of renewables
  • Publicly owned coal fired-power stations to convert to clean energy hubs to transition to, for example, hydrogen power, with jobs guarantees for workers
  • Queensland’s publicly-owned coal-fired power stations to stop reliance on burning coal by 2035
  • 100,000 new jobs by 2040, most in regional Queensland
  • 11.5GW of rooftop solar and 6GW of embedded batteries
  • 95% of investment in regional Queensland
  • Building Queensland’s first hydrogen ready gas turbine

With this announcement by the Premier, Edge look forward to more renewable generation entering the market resulting in savings for end users and the planet.

If procuring renewable energy is one of your company goals, Edge2020 can help you build a PPA to support your sustainability strategies. Contact us on 1800 334 336 or info@edge2020.com.au