If you have been watching the news over the past couple of days you will be aware that Australia, and in particular Queensland, is currently in the midst of an energy crisis, and there is a real threat that the lights are going to be switched off!
Fortunately, our politicians have swung into action to resolve the problem. Unfortunately, this has mostly been by doing what they do best – blame everyone else and push their own agenda.
Here is a VERY simplified explanation of what has happened so far:
- There is a shortage of coal due to high demand, the war in Ukraine putting pressure on international markets, and domestic markets having to compete with export markets. This made the cost of electricity from coal fired power stations go up.
- There is also a shortage of gas for the same reasons as above. This made the cost of electricity from gas fired power stations go up.
- It got really hot earlier in the year so the demand for electricity went up – and so did the price of it.
- It got really cold recently and demand for electricity went up – and so did the price of it.
- Several coal fired power stations went off line in unplanned outages (ie, they broke down) so less electricity was being made – so the price of it went up.
- Some other power stations went offline for routine maintenance so less electricity was being made – so the price of it went up.
- By this time the wholesale cost of electricity was spiralling out of control so the Australian Energy Market Operator (AEMO, the agency that oversees operations of the national electricity grid) stepped in and put a cap on how much the generators could charge.
- The generators didn’t like this at all, they thought they would lose money. So, they “withdrew their bids” to make electricity, and we came close to seeing blackouts across the grid.
- AEMO then used its powers to force the generators to make enough electricity. This helps stave off the threat of blackouts, but it doesn’t help the broken system. Don’t worry though, if the generators do lose money they can be compensated – by us (which, by the way, is really another price increase in electricity. It just won’t be on your bill).
- Then, AEMO suspended the electricity market and is currently directing all concerned what to do to make sure the lights stay on. This has never happened before and is a sure sign that the system is broken and something has to change.
And that’s where we are right now.
So, what does this mean for you and I?
Out of everything that has, is, and is going to happen, this is the one question that can answered with 100% confidence and accuracy – the price of electricity will go up.
Your role in the energy crisis
Whatever the reasons, there is a shortage of electricity at the moment. The immediate response from all of us should be pretty obvious. Try to use less and help take a bit of pressure off the grid. This will also have the added bonus of saving you some money as well.
I’d like to leave you with one final thought: The cost of coal used to make electricity has gone up, which makes the cost of that electricity go up. The cost of gas used to make electricity has gone up, which makes the cost of that electricity go up. The cost of sunlight that makes electricity has remained the same, not just through the current energy crisis, but since the first solar panel was invented.