Latest news with #LouisaKinnear
Herald Sun
18-06-2025
- Business
- Herald Sun
Discount power bills: DMO crackdown by Labor will crush small energy retailers
The Albanese government's planned overhaul of household electricity price caps could put small energy retailers surviving on razor-thin profit margins out of business. The electricity industry was reeling at the policy proposal on Wednesday as intermittent coal outages in Victoria this winter stoke wholesale prices, a force that will inevitably be passed through to energy customers. Federal Energy Minister Chris Bowen confirmed the government would review the Default Market Offer (DMO) – the benchmark power price in NSW, Queensland and South Australia – with a view to stripping out allowances that protect retailer margins. The idea is to bring the national standard into closer alignment with Victoria's more tightly regulated counterpart, the Victorian Default Offer (VDO), which will rise by less than 1 per cent in 2024–25. While the move is politically popular amid persistent cost-of-living pressures, it represents a gamble by the re-elected Labor government that could backfire by reducing utility competition as small retailers capitulate under further pressure. 'This is classic Trump-style politics – a distraction tactic,' one senior industry executive said speaking on the condition of anonymity. 'Labor is blaming retailers when even the ACCC acknowledges margins are at historic lows. All this will do is squeeze out smaller operators and reduce competition, with no discernible impact on prices.' The government's intent to unwind some components of the DMO – including retailer cost allowances – has reignited discussion over the true drivers of rising energy bills. Retailers argue the biggest pressure point is not retail margins, but network charges, which account for about 40 per cent of the DMO and are rising as transmission infrastructure is upgraded to support the transition to renewables. Network costs are approved by the government and are the fastest growing component of the DMO. Australian Energy Council chief executive Louisa Kinnear, which represents the country's retailers, said while a review of the DMO was welcome, it must be comprehensive in its scope as far as cost components go. 'Retail competition allowances have already been stripped out of the DMO in the name of affordability. Yet bills are still climbing, and it's not because of retail margins,' Ms Kinnear said. 'Retailers are also required to support customers facing hardship, which often means carrying bad debts. If we want prices that reflect actual costs, all elements of the DMO need to be under scrutiny.' AGL echoed that sentiment, insisting the review should not lose sight of the role of network costs. 'To reduce energy bills, we need to look at the whole picture. The government and industry are actively working on measures to reduce wholesale electricity costs. At 40 per cent of an average bill, network costs are a big component of bills and are continuing to grow quickly. 'A focus on improving network productivity is essential to keep these costs in check. Retail costs only represent around 10 per cent of an average bill and we need to carefully consider any moves that could lessen competition in the retail market, particularly if smaller retailers were no longer able to operate,' a spokesman for AGL said. Victoria, meanwhile, is facing a renewed test of its grid reliability as colder temperatures return and EnergyAustralia's Yallourn coal power station operates at just 25 per cent of its capacity. Yallourn, the state's second largest coal-powered generator, has been crippled by equipment failures, including a collapsed air duct, though the company has not disclosed the cause of outages at two of its four generating units. The outages and cold weather again leave Victoria with little wriggle room. The country's energy market operators expect sufficient capacity to minimise concerns about blackouts, but prices are forecast to surge. Households and businesses, however, do not pay wholesale electricity prices. The disruption is material for EnergyAustralia, which typically uses Yallourn to supply its retail customers and hedge against volatility in wholesale markets. With the coal plant hobbled, the utility is instead relying on more expensive gas peaking plants to meet demand – a margin-eroding outcome that it can only partially mitigate due to benign conditions in the gas market. Gas prices remain elevated but manageable, buoyed by near-record storage levels. However, continued outages at Yallourn could test those assumptions if winter demand intensifies. Originally published as Chris Bowen's default market offer crackdown will crush small energy retailers
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.
ABC News
25-05-2025
- Business
- ABC News
Central Queensland town at centre of 'battery boom' pushes for more input
Nestled among dry rainforest at the base of a mountain range in Central Queensland, a small country town is fighting what it sees as a battle threatening to transform its rural tranquillity: a national battery boom. Five companies are planning to build or expand large-scale Battery Energy Storage Systems (BESS) in Bouldercombe, or nearby. Mikaela Humble lives in the town of about 1,000 people and is among a group of residents fighting to be part of the planning processes for the facilities. "Some of these developers have been working on these projects for years … they do all their studies and then they present it to the community [at the end] … it's about giving us a voice." The companies are coming to Bouldercombe in large part thanks to a local substation, connected to the power grid. The battery systems work by storing excess generated energy, so that it can be dispatched at other times when the grid needs it. According to the Australian Energy Council's CEO Louisa Kinnear, there is currently a "battery boom", with demand set to increase as the country transitions away from ageing coal-fired power stations. "They provide very rapid and flexible responses to maintain grid stability and that becomes really important in a high renewables grid," Ms Kinnear said. She said combining current and committed projects, the country was looking at a guaranteed battery storage of about 8 to 10 gigawatts in the near future. However, she estimated the country would need 56 gigawatts of battery storage by 2050, though about 30–35 of those gigawatts may come from anticipated home battery systems. She agreed community needed to be involved, especially in locations where multiple projects were being considered. According to Ms Humble, key concerns with the projects were about increased road use and noise, as well as fire risk, following a blaze at a local existing BESS in 2023. She argued the projects could be built in designated industrial areas, separate to rural zoning regions, further from the substation. For the businesses, the closer they are to a sub-station, the cheaper they are to build and operate. Ms Humble said the community had petitioned the Rockhampton Regional Council to request a Temporary Local Planning Instrument (TLPI) from the state's Minister for Planning Jarrod Bleijie, so he could intervene on projects if needed. Last year the council did not approve a development application put forward by ACEnergy for a BESS in Bouldercombe on the grounds it went against the rural zone code, as well as concerns about end-of-life plans and bushfire management. More than 300 public submissions were received on the project, almost all against it. The company is going through court to appeal the decision and said it was also participating in mediation with the council and community representatives. In addition to the ACEnergy proposal, companies Potentia and Silo Energy have also lodged development applications through the council for Bouldercombe and Gracemere, respectively. Both said they would work with the community to address any concerns. Company Genex has a BESS connected to the local substation, but its original development approval included a stage-two expansion, with construction expected to start in 2027 at the earliest. Genex said it too would engage with the community on the expansion and had put up sound-absorbing "sonic curtains" around the current batteries in a bid to reduce noise. It had also installed lighting deflectors and tree screening. Australian Renewable Energy Services (ARES) plans to lodge its development application for a Bouldercombe BESS next year. Managing director Sigi Psutka-Jones said the company was consulting neighbours, and would hold public community consultation sessions this year. In the meantime, despite most of the projects only at the proposal stage, Bouldercombe residents say they are already feeling an impact. "[These projects] really do fracture community groups and friendships," Ms Humble said.
