https://www.wsj.com/articles/a-warning-from-australias-power-crisis-green-energy-anthony-albanese-11655659465?mod=opinion_lead_pos4
Australia’s new Labor Prime Minister Anthony Albanese has promised to ramp up green energy, but a national electricity crisis is showing that fossil fuels are hard to drop. Oz’s power crunch offers a warning for America’s political class, if it’s willing to listen.
Australia’s grid operator in June suspended the national spot market for power to prevent looming blackouts. Regulators ordered power generators using fossil fuels when they could run while also fixing prices. The grid operator last week lifted market controls but warned they could be reimposed if prices spike.
Australia’s climate left blamed the mess on fossil-fuel companies manipulating markets. Sound familiar? Some accused coal generators of deliberately withholding power to drive up electricity prices to boost profits before they are forced to close by climate regulation. As usual, the real culprit is bad energy policy. Australia has plentiful gas reserves, but it lacks the pipeline capacity to transport the fuel to metropolitan areas in the nation’s south. Coal still generates about 60% of Australia’s power, and renewables make up a third. The latter is about as much as in California, which is experiencing similar power shortfalls.
Renewable mandates in Australia have made it harder for coal plants to turn a profit. Many have shut down. Others skimped on maintenance, though they are stressed from powering up and down to back up renewables. Meantime, coal and natural gas prices are surging globally amid the war in Ukraine and economic recovery from the pandemic. Weak solar and wind output at the start of Australia’s winter has also squeezed power supply.
This confluence of events caused Australia’s spot power prices to spike, which prompted its grid operator to cap wholesale prices. Coal and gas generators couldn’t cover the cost of their fuel. Predictably, they throttled production, which set the stage for the recent market suspension.