Latest news with #AEMO
Sky News AU
2 days ago
- Business
- Sky News AU
Beach Energy boss Brett Woods slams Victoria's gas policy after Santos CEO Kevin Gallagher likens state to North Korea
Another CEO of a major Australian energy company has torn into the Victorian government's gas policy after the state was compared to North Korea last week. Victoria's handling of gas development and the state government's attitude towards investment came under fire when Santos chief executive Kevin Gallagher lashed out at a conference in Brisbane. 'If I think about Queensland, South Australia, Western Australia – these are very supportive, very development-friendly jurisdictions,' Mr Gallagher said. 'Victoria? North Korea. They're different altogether.' On the sidelines of the same conference, Beach Energy CEO Brett Woods said getting gas projects approved in Victoria had 'been a challenge'. 'Victoria still have had quite a negative policy in terms of what the role of gas is in the state,' Mr Woods said on Sky News' Business Weekend. 'I think the recognition now, with industry shutting down and foreclosures and other things, (is) that they need more gas. 'We're ready to help, we just want to get after our projects so we can move them forward.' Victoria continues to be the most gas-dependent state in the country as the fuel is critical for warming homes and businesses during winter. However, a green energy focus, depleting offshore gas supplies and historical moratorium banning gas exploration, which was lifted in 2022, means Victoria faces looming shortfalls and may have to begin importing liquefied natural gas in the coming years. Mr Woods said red tape and delays meant it took more than 40 approvals to get a single gas well online in Victoria. 'That was challenging. It took considerable time,' he said. 'That really challenges our ability to continue to explore and invest. I think in recent months we've seen positive energy out of Victoria to see more gas, so that's been great. 'But when you have these challenges, it's hard to bring shareholders and boards along to the journey about deploying company capital.' Victoria was formerly a major gas powerhouse and exported the fuel source to NSW and South Australia, however, concerns about the future of gas in the state are now common. The Australian Competition and Consumer Commission earlier this year warned about winter shortfalls in south-eastern states, while the Australian Energy Market Operator (AEMO) projects shortfalls during peak demand from 2028. AEMO also forecasted annual supply gaps from 2029. While some smaller players look for gas onshore, the major players are avoiding this and looking towards more development of offshore gas. ExxonMobil and Woodside have recently approved a $350m investment to launch new drilling projects in the Bass Strait, while ConocoPhillips will spend more than $100m on drilling two exploration wells in the area.
ABC News
5 days ago
- Business
- ABC News
Gas reserve scheme for south-east on the table as government searches for answer to 2029 shortfall warning
The prospect of a gas reservation scheme could be revived by Labor, with ministers signalling the sector's supply of gas to Australia is under review and noting that states with schemes already in place have been able to operate successfully. Newly appointed Industry Minister Tim Ayres would not rule out possible laws that would force gas producers to reserve some of their supply for the domestic market. "We've got our focus on what happens over the next three to five years, and [Resources Minister] Madeleine King has made it pretty clear, we are focused on making sure the mechanisms that are there, and the packages that are there, are delivering the purpose they need to deliver," he told Sky News. "What we're not going to do is do what the Coalition did during the election campaign, which was policy on the run. "The Coalition ran around pretending to be the best friend the gas industry had … then at the last second cobbled together a pretend reservation strategy that would have delivered a sixth of what the government had already delivered." Federal and state governments are doubling down on gas, with a warning from the Australian Energy Market Operator (AEMO) that the south-eastern states face shortfalls from 2029. This week, Victoria green-lit a controversial gas import terminal in Geelong, and the federal government signed off on a multi-decade extension to Western Australia's North West Shelf project. In a major speech to the industry this week, the resources minister put the sector on notice that its social licence depended on pumping more affordable gas into the domestic market. While Western Australia and Queensland have rules requiring multinational gas companies to hold some of the gas they drill for the domestic market, there is no "gas reserve" for the south-eastern states. And, the east coast, which sits on a different energy grid to the west, has been warned of gas shortfalls as soon as 2029 due to the dwindling supply set aside for domestic use. While the idea of an East Coast Gas Reserve has been popular in Labor circles, it has traditionally been opposed by the Coalition. But Peter Dutton unusually took a promise to the federal election to establish a gas reserve on the east coast that would force gas producers to hold up to 100 petajoules for the domestic market, equivalent to about a fifth of demand. The Coalition claimed doing so could also lower household power prices by 7 per cent. That move has opened political ground for the government to consider a gas reserve for the east coast — something the industry understood was already being developed by Labor as a response to Mr Dutton's policy, but was ultimately not taken to the election. Under WA's gas reserve mechanism, long-term contracts are negotiated with developers at a project's inception to require a certain amount of that project's gas production to be kept for Australian use. In a statement, Ms King said the gas industry had been able to successfully operate in WA, as well as under a similar policy in Queensland. "Queensland and Western Australia are our two biggest gas exporters and they both have state-based gas reservation schemes," the resources minister said in a statement. "The government will progress the planned review of gas market frameworks and the role of market bodies to ensure more gas is made available for Australians." Gas producers have opposed the idea of a reserve that would apply to already-established projects, saying the business cases for those projects were developed with a set percentage to be exported. Gas has been centre-stage in the days since the election, with Environment Minister Murray Watt on Wednesday approving the extension of Australia's largest oil and gas project, North West Shelf, from 2030 to 2070. That decision has also brought Woodside a step closer to approval for its proposed expansion into the Browse Basin and a 900-kilometre pipeline that would be connected to the North West Shelf processing facility in Karratha. But it has prompted fury from climate groups that say it threatens Australia's aims to reach net zero emissions by 2050. Overnight, the Victorian government also confirmed environmental approval for a gas import terminal in Corio, setting up the state to bring in gas from interstate or overseas. If Viva Energy proceeds with the terminal it would be able to supply up to 160 petajoules of gas, about 88 per cent of the state's current consumption. The state government said that would help to ward off the AEMO's warnings of supply shortfalls from 2029. In an opinion piece in the Canberra Times, independent senator David Pocock wrote that there was not a shortage of gas — it just wasn't being sent to Australia. "Over the past decade, east coast gas production has doubled. Prices have tripled," he wrote. "Domestic demand is falling, yet households and manufacturers are paying through the nose because more than three-quarters of our gas is exported or used in export processing."
Sky News AU
6 days ago
- Business
- Sky News AU
Santos CEO Kevin Gallagher likens Victoria to North Korea as debate over the state's gas policy rages
Victoria's handling of gas development has been panned as a major executive compared the state with North Korea when it comes to investment. Victoria continues to be the most gas-dependent state in the country as the fuel is critical for warming homes and businesses during winter. However, a green energy focus, depleting offshore gas supplies and historical moratorium banning gas exploration means Victoria faces looming shortfalls and may have to begin importing liquefied natural gas in the coming years. The dire energy situation plaguing the state sparked concerns amongst business leaders, particularly Santos chief executive Kevin Gallagher who lambasted Victoria's attitude toward investment. 'If I think about Queensland, South Australia, Western Australia – these are very supportive, very development-friendly jurisdictions. Victoria? North Korea. They're different altogether,' Mr Gallagher told an oil and gas conference in Brisbane. Victoria has historically been a major gas powerhouse and exported the fuel to New South Wales and South Australia. Low reserves in offshore gas plants and a historical moratorium banning the development of onshore gas, which was lifted in 2022, has led to concerns about the future of gas in the state. The Australian Competition and Consumer Commission earlier this year warned about winter shortfalls in south-eastern states, while the Australian Energy Market Operator (AEMO) projects shortfalls during peak demand from 2028. AEMO also forecasted annual supply gaps from 2029. While some smaller players look for gas onshore, the major players are avoiding this and looking towards more development of offshore gas. ExxonMobil and Woodside have recently approved a $350m investment to launch new drilling projects in the Bass Strait, while ConocoPhillips will spend more than $100m on drilling two exploration wells in the area. The Grattan Institute's energy director Tony Wood said Mr Gallagher's comments came in light of Victoria's mixed history with gas. 'I don't think it's true to say that Victoria, both onshore and offshore, is off limits to new gas,' Mr Wood told Sky News on Thursday. 'But you'd have to say, that history has probably coloured that view of Victoria and probably contributed to Kevin Gallagher's comments yesterday.' He noted the Victorian government's shift back towards gas was a step in the right direction after it ended the moratorium. 'There was too much of a move away from gas,' Mr Wood said. 'The gas wasn't gonna be in the future (but) there's a recognition now from the government to say: 'No, we understand. There is a role for gas here'. 'But you can see why those mixed messages would have influenced a lot of people in the gas industry.' Mr Gallagher's comment led to immediate backlash from Victorian Treasurer Jaclyn Symes who labelled the attack 'hysterical and unhinged'. 'Victoria has the strongest economic and investment growth of any other state,' Ms Symes told reporters. 'Anybody talking down Victoria is simply anti-Victorian.' It also faced criticism from Bruce Mountain, the director of the Victoria Energy Policy Centre, who noted industry had historically avoided some sources of gas. 'It's a bit of a cheap shot,' Mr Mountain told 'Victoria potentially has coal seam gas, but that's not been attractive to the Victorian people and consistently over time, both political parties have shied clear of it after having clearly experienced the opposition from the Victorian community and landholders.' Mr Mountain noted the lack of onshore gas in Victoria was a factor behind major companies avoiding looking into the areas. 'You can prospect for gas and there has long been a conventional gas programme and the Andrews government authorised it several years ago, but there's no evidence of any sizable conventional gas resource onshore in Victoria,' he said. 'There's nothing stopping Santos or others from seeking that resource and they haven't been stopped from it for several years. 'So I don't know what the specific issue is that he has.' Victoria banned new gas connections for homes and businesses from late 2024 in a bid to phase out the fossil fuel.
The Australian
26-05-2025
- Business
- The Australian
Future of power uncertain and expensive
The Energy Market Regulator on Monday confirmed that households will pay up to an additional $280 a year for electricity. The increase is because of higher prices in the wholesale market caused by lower-than-expected supplies of renewable energy and less reliability from a rapidly deteriorating coal-power fleet. Households in NSW face the steepest increase, up to $280, while Queensland household electricity bills are projected to increase by as much as $77 and South Australia as much as $71. Australian Energy Council chief executive Louisa Kinnear says price pressures will continue as a result of the energy transition, with the costs of the poles and wires as well as retail costs all contributing to price rises. This follows confirmation by the Australian Energy Market Operator last week that the cost of building transmission lines had gone up by up to 55 per cent. As a result, AEMO says it will investigate whether planned transmission projects that have not been committed are still financially worthwhile. More attention will now be paid to how to use spare capacity from household rooftop solar systems and batteries, otherwise known as Consumer Energy Resources. AEMO admits it is a big challenge. While AEMO's 2024 system plan had a focus on five national market regions with about 300 bulk supply points, the 2026 system plan will for the first time consider low-voltage networks. This will involve more than 500,000 low-voltage transformer sites and the CER connected to more than nine million customers. The feedback from power utilities has been informative. In April, Transgrid said assumptions that Virtual Power Plants will experience the same level of availability and flexibility to respond to market conditions as an equivalently sized utility-scale battery energy storage system are not reasonable. Households were unlikely to accept that their assets may be accessed frequently and run very hard because household solar and batteries are primarily investments intended to provide utility and value to consumers rather than the market, Transgrid said. In March, Queensland power utilities Ergon Energy and Energex gave a similar warning. 'We are cautious of the approach to model customer behaviour based on economically rational models, as we consider most CER investments do not conform to these modelling outcomes,' the utilities said. 'For example, based on our anecdotal experience, AEMO's assumptions regarding the level of battery energy storage systems uptake supported by Virtual Power Plants may be overstated.' In short, the costs of intermittent generation and distribution are rising. The reliability of coal is declining. The costs of transmission lines risk becoming uneconomic. The industry is grappling with its social licence in rural and remote areas. The alternative of taking power from rooftop solar and batteries fits with government plans – and industry hopes – for new household subsidies but has many challenges that are known and many yet to be discovered. The future is higher costs and less certainty. Graham Lloyd Environment Editor Graham Lloyd has worked nationally and internationally for The Australian newspaper for more than 20 years. He has held various senior roles including night editor, environment editor, foreign correspondent, feature writer, chief editorial writer, bureau chief and deputy business editor. Graham has published a book on Australia's most extraordinary wild places and travelled extensively through Mexico, South America and South East Asia. He writes on energy and environmental politics and is a regular commentator on Sky News.
West Australian
26-05-2025
- Business
- West Australian
Energy bills set to rise again after sharp increase in cost of maintaining and upgrading networks
Australian households and small businesses are set to pay more for electricity from July 1, as the energy regulator confirms price hikes driven by a sharp escalation in the cost of maintaining and upgrading the nation's power networks. The Australian Energy Regulator benchmark prices for electricity customers in New South Wales, South East Queensland and South Australia will rise between 0.5 per cent and 9.7 per cent, depending on their region. NSW customers will bear the brunt, with average household price rises of 8.3 to 9.7 per cent, driven primarily by higher wholesale electricity contract costs. NSW small business customers across the east coast will see increases of up to 8.5 per cent. The other jurisdictions under the Default Market Offer would not be a heavily affected, with price rises of 0.5 to 3.7 per cent in South East Queensland and 2.3 to 3.2 per cent in South Australia, with small business customers facing rises of up to between 0.8 per cent to 3.5 per cent. AER chair Clare Savage described it as a 'difficult decision' amid persistent cost-of-living pressures. 'Sustained pressures across almost all components of the DMO (Default Market Offer) have driven these price rises,' Ms Savage said, citing wholesale and network increases of up to 11 per cent and retail cost rises of up to 35 per cent in the past year. Ms Savage urged consumers to shop around, noting that 90 to 95 per cent of market offers remain below the DMO price, with discounts averaging between 18 and 27 per cent. The bill hikes reflect a blowout in construction costs for the network, a deeper structural issue that will continue to put upward pressure on bills, according to the Australian Energy Market Operator's Draft 2025 Electricity Network Options Report, released Friday. The report shows the cost of building and maintaining the high-voltage transmission system has ballooned by up to 55 per cent since the last planning cycle, driven by supply chain constraints, workforce shortages, and the sheer scale and complexity of new projects. 'AEMO recognises that increases in costs for electricity transmission network development would impact bills for electricity consumers,' the report noted. Even after accounting for inflation, the real costs of overhead line projects are up 25 to 55 per cent, while substation costs have climbed 10 to 35 per cent. Distribution upgrades needed to accommodate growing rooftop solar and battery use are also proving expensive, with augmentation costs ranging from $730,000 to $2.4 million per megawatt depending on location. For example, SA Power Networks faces average distribution upgrade costs of $1.6 million per megawatt, while Ausgrid in NSW is at the lower end at $730,000 per megawatt, according to AEMO. The surge in infrastructure costs is expected to feed through to retail electricity bills in the coming years, particularly as the energy system adapts to electrification, more variable renewables, and consumer energy resources such as rooftop solar, electric vehicles and batteries.
