The incoming government has been hit by a perfect energy storm: winter plus soaring fuel prices through reasons way beyond its control. The war in Ukraine has reduced global gas supply. As Europe, in particular, scrambles for alternative supplies, prices have soared.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
But there is also a domestic factor. There has been under-investment in electricity generation. Supply has not kept up with demand, and when supply gets tightened by sudden outside events (like war), there is a crisis.
In May, the Australian Energy Regulator set new base prices across Australia. Virtually everywhere apart from the ACT, the new prices are much higher than the old ones. In New South Wales, for example, the average power bill for households will rise from $119 to $227. That hurts.
Trading on the Australian wholesale electricity market has been suspended, with the Australian Energy Market Operator stepping in to direct who produces for the grid.
There is a lack of competition in Australia. The experts say that there are just too few buyers and sellers of gas and electricity. Without competition, companies do what companies do: they maximise their profits - at the expense of consumers.
On top of that, Australia's largest power station, Eraring Power Station in the Hunter Valley, flagged that it was running out of coal.
So it is not the whole truth to just blame outside factors for the current difficulty.
The lack of investment has been, at least partly, caused by uncertainty. Why would a company invest in a power source - gas, coal, wind, solar or hydro - if it didn't quite know what the market will look like in five years' time, let alone the decades on which such big investments depend?
Coal has seemed increasingly unattractive so coal-fired power stations are running out of steam.
Renewable sources - solar and wind, primarily - aren't yet as dependable as coal and gas-fired power stations. Once they are up and running, the cost of extra units of electricity is virtually zero.
But they do need batteries to feed electricity into the grid when the sun doesn't shine and the wind doesn't blow.
This technology is still developing, and the investment needed would be very large indeed.
We need a hard-headed calculation of options with costs. Too much of the rhetoric has been about the benefits of renewables without looking at the cost of delivering them. We need detail, supplied by engineers and economists.
The grid on the east coast of Australia is configured around coal-fired power stations, with gas-fired power stations supplementing coal's output at peaks of demand.
But changing that configuration means a re-engineered grid. That costs money, and it can't be built overnight.
In Germany, for example, moving away from nuclear power didn't just mean closing power stations and reopening others. The grid had to be remade because the new wind farms were on the coast and the old nuclear power stations were far inland.
As coal has seemed increasingly doomed, there hasn't been the political certainty needed to justify private investment in gas-fired power. Some argue for all fossil fuels to be ditched but there may be a case in the mix for some gas.
The incoming government has a clear mandate to sort the mess out, though the three-year life of a parliament does not make long-term solutions easy.
All the same, the time for a clear plan of action is upon us. We can't afford this drift.
