Investor News

Australians hit with $7b energy bill

Earlier this week, Bluescope Steel's outgoing Managing Director Paul O'Malley, delivered a scathing assessment of the economic cost to Australians of the current energy policy.

"The increase in domestic gas prices since 2015 has cost Australian gas users approximately $3.5 billion per annum. For electricity, the cost to users of rising electricity prices is over $3.7 billion per annum,"

His suggestion on how to fix the problem is simple and pragmatic; a baseload target needs to be implemented to deliver affordable, reliable electricity.

But there is one flaw in this simple plan. He's a fan of providing that baseload from gas-fired power generation. The same high-priced gas, he notes, has cost us an extra $3.5 billion per year. This would undoubtedly improve reliability but won't do much for affordability.

So, while we agree with the need for a baseload target, it must also deliver an affordable, reliable electricity supply. And unless sufficient new gas supplies are developed in the domestic market, the gas price will remain high.

This means coal will likely continue to be used well into the future via high-efficiency, low-emission (HELE) technology.

At present, HELE technology is designed to run on high-quality black coal. All told, there are around 1,100 HELE plants planned or under construction globally. Far from leaving Australia behind in its use of coal, Japan, Germany, China, India, and others are building HELE plants in an effort to either restore affordability within a system that features high renewable penetration or to bring down emissions intensity under the Paris Agreement commitments.

Unfortunately, HELE technology can't run on wet, brown coal. This means Victoria's world-class brown coal assets are potentially stranded unless they can be dried.

Drying is easy. Drying efficiently and cost-effectively is the challenge. Conventional drying is relatively energy- and CO2-intensive and expensive.

A drying solution needs to deliver a net energy uplift and, preferably, zero CO2 emissions at the lowest possible marginal cost if it is to support an affordable energy policy.

This is where our Coldry technology can act as a gateway solution, enabling the use of HELE technology in Victoria to restore reliability and affordability while reducing CO2 intensity by 43% to 62%. We covered this in more detail in a previous post (click here).

In short, O'Malley is on the right track with a baseload target. We think a Coldry-enabled HELE solution is a better way to achieve the balance between affordability, reliability, and emissions reductions.

Source: Australians hit with $7b power slug says BlueScope