Australia’s energy crisis makes fossil fuel exporters winners and everyone else losers, expert says

This month Australia’s third-largest energy provider, EnergyAustralia, revealed that it had slumped to a loss of $1.6 billion during the first six months of this year.

The result was somewhat of a shock to the average punter who got used to the idea that sky-high wholesale energy prices would be a boon to the power giants.

Then came this week, when Australia’s big two, Origin Energy and AGL, reported falling profits in their electricity businesses.

Tim Buckley, founder of the research firm Climate Energy Finance, said the results could be summed up in a fairly simple explanation: Soaring coal and gas prices were a blessing for exporters and a curse for everyone else.

“Consumers are being screwed, either because gas prices have skyrocketed or because electricity prices have doubled, tripled, that kind of thing,” Buckley said.

“There are the national energy companies that are being hit by the same unpredictable forces.

“Those who are kissing like bandits are the big exporters of fossil fuel raw materials.”

This week provided the clearest picture yet of the winners and losers from the unprecedented chaos sweeping Australia’s energy markets.

Mr Buckley said that contrary to expectations, electricity providers were suffering.

The crisis does not benefit public service companies

Reasons for this, it said, included the increasingly unreliable nature of its coal-fired power plants, whose deteriorating performance often left them unable to supply the market.

Mine conveyor belt sprays coal into the air in a dug heap at a mine in Oaky Creek near Middlemount in central Qld
Coal still accounts for two-thirds of electricity generation on the East Coast, and prices have skyrocketed.(AAP)

He said that on top of that, those same power companies were exposed to fuel costs for coal and gas, which had been pushed to record highs amid the Russian invasion of Ukraine.

Furthermore, uncertainty over energy policy at the national level for more than a decade had sown the seeds of underinvestment in the renewable energy that would be needed to replace aging fossil fuel generation.

Buckley said the result was painful for companies like AGL and Origin.

Be the first to comment

Leave a Reply

Your email address will not be published.