Victoria’s main gas facility to run out by end of winter as wind...

Victoria’s main gas facility to run out by end of winter as wind farmoutput slumps to five-year low

Victoria’s main gas storage plant is set to run out by the end of winter. Picture: NCA NewsWire / Ian Currie

• EXCLUSIVE

By PERRY WILLIAMS

BUSINESS EDITOR

and RHIANNON DOWN

REPORTER

• 9:29PM JUNE 23, 2024
• 29 COMMENTS

The nation isfacing a deepening energy crisis on two fronts, with gas shortages so acute that Victoria’s main storage plant is set to run out by the end of winter and one of Australia’s biggest manufacturers warning it will slash jobs and close factories if supplies remain short.

As the politicalbattle rages over energy policy, there is also concern about supplies from thecountry’s wind farms, with output slumping to a five-year low.

The east coast waslast week plunged into a fresh energy emergency amid warnings of gas shortagesafter supply disruptions and a winter cold snap triggered a run on reserves.

The Australian canreveal that the energy regulator cautioned the industry that the largestsupplier of gas storage on the east coast, Lochard Energy’s Iona facility innortheast Victoria, could run out of gas before the end of winter.

The AustralianEnergy Market Operator told industry and gas users on Thursday that thedrawdown from the Iona facility needed to be halved from about 400 terajoulesa day to an average of 200 to avoid it running dry.

The situation hasalso triggered a warning from Orica, one of Australia’s biggest gas users,which said it faced a decision over cutting production and jobs at itsNewcastle plant unless conditions in the gas market improved.

READ MORE:Blackout fears focus attention on policy | Victoria’s gas crisis a decade in the making | Australia must make case for global funds: Citi boss |

Orica is a majorsupplier of explosives to the mining industry but said it might be forced to importammonia for its Kooragang Island manufacturing plant in Newcastle in the nextfew years if not enough affordable gas was available.

German Morales,Orica’s president for Australia Pacific and sustainability, told The Australianthat “there is not enough gas and there is not affordable gas”.

“Clearly if wefail to secure long-term gas at a reasonable market price, we may be put in aposition of rethinking what is the manufacturing strategy for ammonia inAustralia,” he said.

“The Australiangas price is significantly more expensive than that you can buy in otherjurisdictions, such as the US. That’s making it very difficult to justifymanufacturing in Australia.”

With the energycrisis due to dominate parliament on Monday, former Labor prime minister PaulKeating swung in to attackPeter Dutton’s plan to build seven nuclear reactors around the country, saying it was an “industrial fantasy” and the “most lethal technology of another age”.

“Only the mostwicked and cynical of individuals would foist such a blight on an earnestcommunity like Australia – a community which fundamentally believes in truthand decency and which relies on its political system to advance those ideals,” hesaid.

The OppositionLeader labelled Mr Keating’s remarks a “petulant outburst” that would furtherundermine the national interest, and ignored claims that Labor’s all-renewablespolicy could cost $1.3 trillion to rewire the electricity grid.

		THEAUSTRALIAN.COM.AU05:14uclear a ‘big step to take’ for Australia

Crawford School ofPublic Policy Professor Warwick McKibbin says Australia needs a “comprehensivereport” on nuclear before it is implemented as it is a “big step to take”.Opposition leader Peter Dutton announced the Coalition’s nuclear plan lastweek. “I think the cost advantage has moved towards renewables since we More

“Even PrimeMinister (Anthony) Albanese acknowledged that Mr Keating’s recent ramblings oninternational affairs were ‘unfortunate’,” Mr Dutton said. “Mr Keating’sstatement (on Sunday) is no different. This petulant outburst from a man whocriticises AUKUS just undermines our national interest.”

The exchange cameas consultancy group WattClarity said the yield from major wind farms acrossthe national electricity market was easily the worst in the past five years.

It said thecapacity factor, the share of actual electricity generated by a plant, was atjust 21 per cent for the year as of June 22.

“2024 might be asmuch as 3,000,000 megawatt hours ‘short’ of wind production through the secondquarter compared to what some might have expected,” WattClarity’s Paul McArdlesaid.

The politicaldebate on Mr Dutton’s nuclear push focused on cost on Sunday, with Nationalsleader David Littleproud failing to rebut Labor’s claim that the Coalition’senergy policy could cost as much as $387bn, arguing it would still becheaper than the government’s plan to rewire the grid for therenewable transition.

The Coalition alsorevealed more than one reactor could be built on each identified site, but itis unlikely to reveal the exact amount of electricity to come from the planbefore the election.

After EnvironmentMinister Tanya Plibersek claimed the Coalition’s plan could cost $387bn, MrLittleproud said: “Well, that’d be a fraction of what their plan by 2030 of 82per cent renewables would cost.”

		THEAUSTRALIAN.COM.AU04:56 Labor’s ‘ideological view’ on energy ‘doesn’t match reality’: David Littleproud

Nationals leaderDavid Littleproud has called out the Albanese government for its “ideologicalview” on energy policy which “doesn’t match the reality”. Opposition LeaderPeter Dutton announced the Coalition’s nuclear plan last week. “It simply can’tbe done anywhere around the world,” Mr Littleproud told Sky News PoliticalEditor Andrew More

Mr Littleproudaccepted the CSIRO’s estimate that each reactor would cost $8.6bn to build,saying the Coalition had been upfront that the figure was “in the ballpark”.

“We’ve been morethan upfront saying that is in the ballpark, but we’ll be very specific aboutthose costs and those upfront costs,” he told Sky News.

“We’ve also beenupfront about who owns this, not some carpetbagger from overseas comes in,takes it all and runs back for a 15 to 20-year period.

“This will besomething that lasts for 80 to 100 years.”

Opposition energyspokesman Ted O’Brien said an independent nuclear body would determine how manyreactors would be located at each site, as well as what technology wasfeasible.

He conceded thatvoters would not know the exact capacity of the plants down to the gigawattuntil after the election.

“The independentbodies would look at each plant and come up with a recommendation as to whatsort of technology should be used, and from there, it would be exactly whatcapacity based on that technology,” he told the ABC’s Insiders.

Ms Plibersekcriticised Mr Dutton’s nuclear plan for being too expensive, and accused him ofseeking to “slam the brakes on” Australia’s progress towards becoming a “renewablesuperpower”. “If Peter Dutton doesn’t agree with the costs that are out there,he should provide his own costs,” she said. “He’s saying to Australians, Idon’t trust you. I don’t trust you with the costings we’ve done.”

PERRY WILLIAMS

BUSINESS EDITOR

Perry Williams is The Australian’s Business Editor.He was previously a senior reporter covering energy and has also worked atBloomberg and the Australian Financial Review as resources editor and deputycompanie... Read more

RHIANNON DOWN

REPORTER

Rhiannon Down is a political reporter in TheAustralian’s Canberra bureau. She began her career at the paper in the Sydneybureau, where she covered mostly courts and crime, after joining the newspaperas a cadet... Read more

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