If you are looking to renew or extend your current power contract now is still a good time to check the market as we have secured some good deals despite the market movement.
Last week was a difficult week for our energy team with many electricity retailers cancelling any outstanding tender contracts (and prices) that had been offered to our clients to protect themselves from the energy spike.
It serves as a reminder to us all that until an offer is signed, and accepted, retailers have the right to cancel before it expires.
What’s causing the spike in energy prices?
The reason for the spike in energy futures could well be the confusion and continued argument over the National Energy Guarantee (NEG) being debated in Sydney. The NEG has passed the first hurdle, but the extremely low emissions target reduction of 26 per cent in 10 years is cited as far too low. It will be “discussed” again this week.
Last week both Energy Australia and AGL reported huge profit, with AGL tripling their net profit of 2017. AGL has been seen as one of the main culprits in driving up east coast gas prices because of a $2 billion contract it struck to sell gas to Santos’s GLNG project that ended up as exported LNG.
AGL Chief Executive Officer Mr Andrew Vesey on Thursday blamed the surge in electricity prices on the “abrupt” closure of the Hazelwood and Northern coal generators, neither of which was owned by AGL; and higher costs for coal and gas. The same point was made by Cath Tanna, head of rival Energy Australia.
AGL did insist on closing coal fired Lidell in NSW despite pressure from the government to keep it open.
Closing down significant coal fired capacity, without ensuring adequate supply of a greener renewable alternative has caused a national shortage of power at key demand periods and looks set to cause blackouts again this summer. The Victorian and Queensland Labor governments have indicated they will not sign up, while Liberal governments of South Australia, New South Wales and Tasmania will.
Source: ASX, Victoria Futures Market
How does the current cost of power compare versus the last three years?
For clients who are looking to re-contract soon we can advise that the market for peak power has ranged from a low of 7c if you sign up for three years, to a high of 15c early this year. Right now, prices are in the middle of the recent range.
What is the National Energy Guarantee?
News.com.au covers everything you need to know about the National Energy Guarantee and how it affects you. Read more
What is an LGC solar project?
Large users of energy have felt the pain of sharply higher power costs. Energy audits usually reveal that instead of drawing power from the increasingly expensive grid, building a power station on the factory roofs can be a far more efficient way to draw the bulk of their daytime power. The long-term profitability is in part determined by the government green energy cheques paid out monthly to businesses commercial solar systems above 100kw. Demand is up 8x year on year, due to the guarantee of power for under 5c per kW for the next 25 years.
The gold rush for LGC government grant cheques up to 2030 is reaching fever pitch in the solar industry as the NEG threatens to cancel the clean energy target by December 2019. It is widely believed that if this happens LGC green energy funding will be lost along with the smaller scale STC up-front grants. Lead times for large scale installations are around six to nine months as order backlogs extend.
Source: Renew Economy