The real question is: why are we on track to set a new record?
A new report by the Australian Energy Market Operator says the average power price will reach $10 per megawatt hour by 2031.
The benchmark is set at $9.85 by 2020.
It’s the first time the AEMO has set a price in its 35-year history, and comes at a time when coal is surging in price and emissions are falling.
The report says electricity prices are expected to continue to rise at a rate of more than 50 per cent annually through 2031, while emissions are expected at a steady, but declining, rate.
The main driver is a glut of gas and nuclear power stations.
The cost of electricity for consumers will also rise at roughly 10 per cent a year.
But what does the report really say?
It’s a bit of a mystery, especially given the fact it’s an updated version of a similar report a decade ago.
Why is the AEC doing a different report?
The report was developed by the AEP, which is the industry body that manages the Australian energy market.
The AEP is the biggest proponent of emissions reduction in the country.
The latest AEMo report says Australia’s emissions are already on track, and the AEWP’s report is the first in the AEO’s 40-year historical history to say that.
“Our report is a testament to the strength of the current climate and the strength and efficiency of the market,” AEMP chairman, Michael Cusimano, said.
“This is the highest price for electricity that we have seen in our time as a market.”
But why is the report so different?
In its report, the AEA said the average electricity price will be $10 by 2032, which makes the cost of a megawatthour about twice the current price of electricity.
But, it says, the price will increase by about 50 per% annually.
That’s because the Aemos report says we will be burning fossil fuels at a faster rate than our historical levels, and are burning coal at a much higher rate than in the past.
That will mean we’re burning more coal than ever before.
And, if coal prices continue to drop, the total amount of coal burning will drop by half, from 1.2 million tonnes a year to less than 1 million tonnes, and gas by less than one-tenth of one per cent.
That is not all that different from the previous AEMA report.
That report, released in March, estimated a price of $9 per megafaht by 2020, a price that has remained steady at $8.65 by 2020 and is still forecast to be about $7.60 by 2020 or 2021.
But it is now projected that the AEMA report will have a price closer to $10, and that it will be higher than the ASEAN (Association of Southeast Asian Nations) average of $7 per megaht, according to an analysis by Bloomberg New Energy Finance.
Why are we burning so much coal?
AEMOs own analysis found that Australia’s coal-fired power stations accounted for about 50% of our total emissions in the last decade.
That includes all the gas, nuclear and wind plants that are now under construction.
And those plants have been built to burn coal at the current high prices.
But that has meant that they’ve been built for much less than their planned lifespan.
For example, the biggest coal-burning power station in Victoria’s south-west has only been operating since 2011, and has only produced about 1.5 gigawatt hours of electricity, about three times the capacity of the previous biggest coal station in the state, in NSW.
AEMI’s report shows that Australia is burning coal less than it has in the recent past.
And the Aems report is showing that coal is now the biggest source of emissions in our energy system, accounting for almost a quarter of all emissions in 2020.
The new report is more than three times higher than that.
It says the amount of carbon dioxide we’re currently emitting from coal-fuelled power stations is equivalent to what the planet was absorbing at the end of the Industrial Revolution.
Aemi also found that emissions from wind power have increased more than expected.
But emissions from coal have stayed fairly constant since 2010.
Why aren’t we producing more wind power?
Wind is cheaper, easier to build and uses less electricity than coal.
And it also means that we are now able to produce more of it than ever, with a projected capacity of 3.7 gigawatts of wind power capacity by 2035.
But the AEMS report says the capacity is far less than the actual capacity of wind.
It found that just over half of the power that Australia produces from wind will come from existing coal plants.
And even though wind power is much cheaper than coal, it’s still cheaper than a comparable power plant that uses nuclear power,