The energy transition in Australia has turned out to be an appalling disaster, with wholesale power prices having soared to the highest internationally and major manufacturers facing three to four times the price of international operators, which is likely to wipe out the industrial foundation of the country as the renewable projects fail and the country government policies drive the nation towards an economic cliff which is likely to destroy millions of households and businesses.
The manufacturing industry raises an alarm about the cost of energy
According to ABC News, BlueScope has raised an alarm over the energy crisis in Australia, citing unsustainably high gas prices as putting domestic manufacturing into what it describes as a tipping point. The steelmaker reported a one-year profit of $84 million, which is 90 percent lower compared to the $721 million a year earlier.
Speaking at the AGM of the company, the BlueScope CEO Mark Vassela indicated that energy costs are now three or four times higher in Australia than in the US and posed a threat to the Future Made in Australia vision in the country. He warned that, without immediate intervention, there will be no Future Made in Australia.
According to Mr Vassella, BlueScope had provided a comprehensive response to the federal government’s Gas Market Review with proposed short-term and long-term reforms. LNG spot cargos offshore shall be returned to the domestic market, exporters not purchasing domestic gas and re-exporting, and then, longer term, we require structural reform, he said.
The projects on renewable energy have backfired
Mr Vassella also noted that Australia had not yet obtained reliable and affordable renewable energy despite the fact that the proponent of the proposed offshore wind project at Illawarra had given up on the project this month as the world shut its doors to global investors. The project had been submitted to BlueScope before.
We require additional energy, we require that energy be renewable, we require that energy be dependable, we require that energy be cheap, Mr Vassella said. And we were a wind industry-friendly lot. Our products enter the wind farm industry.
The separate reporting of ABC News reveals that consumer advocates are demanding a restructuring of the market cap that enables wholesale power prices in Australia’s largest grid to skyrocket to the highest levels in the world periodically. Organisations such as Energy Consumers Australia indicate that households are paying unnecessary billions of additional dollars under a cap that they face they say can do little to harm them.
Spikes of the highest wholesale prices allowed in the world
Spot electricity prices may go up to 18,600 megawatt-hour or 18.60 a kilowatt hour under the cap. The average electricity prices in retail average between 30 cents and 40 cents per kilowatt hour, and an average household consumes approximately 17 kilowatt hours per day. The market cap has increased by 14,500 megawatt-hours to 16 percent to 22,800 megawatt-hours since 2019, and this is projected to increase by 22,800 megawatt-hours in July next year. It will be nearly 27,000 megawatt hours by 2028.
Brian Spak of Energy Consumers Australia reports that the cap seems not to fulfill both its goals. Mr Spak indicates that the measure is not attracting new generation capacity, which is, in almost all cases, being subsidised by the government.
The energy transition in Australia has become a matter of dire concern due to the skyrocketing manufacturing costs, ineffective renewable development, and stalling of renewable projects as the wholesale electricity price is hitting world records. As market mechanisms are supplanted by government subsidies and large-scale industries threaten to move to foreign shores, policy changes are desperately required to rescue the green energy aspirations and economic viability of the country.