The head of one of Australia’s largest energy companies has warned electricity prices in the country could spike by more than 35 percent amid the push for net-zero.
“When we run our modelling for energy pricing next year, using the current market prices, tariffs are going up a minimum 35 percent,” said Jeff Dimery, CEO of Alinta Energy.
“Now, maybe, the regulators are going to change the rules on that, I’m not sure,” he told The Australian Financial Review’s Energy and Climate Summit.
Dimery also said Russia’s invasion of Ukraine and the transition away from fossil fuels in Australia would contribute to spiking costs.
“What cost me A$1 billion (US$630 million) to acquire is going to cost me A$8 billion (US$5.04 billion) to replace, so let’s talk about that and [someone] explain to me how energy prices still come down,” he said in comments obtained by the Australian Broadcasting Corporation.
“I don’t get it. Am I missing something?”
The CEO also said he planned to continue with the closure of the Loy Yang B coal-fired power station in the state of Victoria, which produces 1,000 megawatts of power, and to replace it with offshore wind and pumped hydro.
Yet Dimery still expressed concern about the cost to Australian residents.
“If you look at all the development that has occurred up to this point—and what needs to happen between now and even 2030—I get concerned,” he said.
“I get concerned about the $60 billion of development that is required in Queensland. I get concerned about the $20 billion [energy giant] AGL has flagged.”
Australia in for a ‘Hard’ Transition to Renewables
His concerns were echoed by Mark Collette, CEO of Energy Australia, who said the country’s take-up of renewable over the last 20 years had progressed well but noted that “the next bit is hard.”The Australian Labor government has enshrined a hard net-zero target into law, meaning energy operators will be pushed to close down coal-fired power plants and up investment significantly in the wind, solar, hydro, and battery storage. There has been much talk about hydrogen, but the technology is not mature enough to be rolled out on a large scale.
By 2030—less than eight years—Australia needs to reduce emissions by 43 percent and ensure 82 percent of the power grid is supported by renewable energy—currently, around 64 percent of energy comes from coal-fired power.
The government is also rolling out a swathe of new regulations—which will likely spur additional public service hiring—to ensure Australia can meet its targets and manage the energy grid so that it is stable and does not suffer outages.
Meanwhile, the push for net-zero comes as Australians, like many of their counterparts in developed countries, experience record inflation driven mainly by the excess printing of currency during the pandemic by governments and central banks.
The war in Ukraine and supply chain shortages have exacerbated these problems.
