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Non-market forces: Stephen Wilson
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Australia exports twice as much coal and three times as much gas as Russia. as Russian. It’s the leading exporter of natural gas with exports three times larger than Russia. It’s the fourth largest producer - and almost all of that is exported, for reasons that we’ll get to later in this podcast.
Yet at home, the Australian energy system is experiencing a deepening energy drought. A perennial shortage of gas in the southern states has pushed up prices leading some gas generators to switch to diesel.
The main electricity grid linking the eastern states is running low on despatchable power as coal fired generators are pulled from the market to be replaced largely with intermittent wind and solar generation.
So much energy, and so little to burn. It brings to mind the plight of the Ancient Mariner in Samuel Taylor Coleridge's poem:
“Water, Water everywhere and not a drop to drink.”
The explanation for the Australian energy drought - like just about everything in the energy field today - is complex.
But at its core it comes down to catastrophic market failure - misallocation of capital and resources on a lavish scale that would have had Adam Smith scratching his head.
So what’s wrong with the Australian electricity market? And more importantly, how the heck do we fix it? Stephen Wilson is an energy economist with 30 years experience of the energy sector in 30 countries. He’s and adjunct professor at the University of Queensland in Brisbane.
Nick Cater is Senior Fellow at the Menzies Research Centre
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