As power prices surge, IEEFA says Labor's capacity mechanism may increase electricity bills even further. Pic: Anton Petrus/ Moment/ Getty Images
Energy
Emission Control is Stockhead’s fortnightly take on all the big news surrounding developments in renewable energy.
Last week, Australia’s energy ministers gathered to address the state-of-flux the energy market finds itself in.
An 11-point plan was drafted, marking the first critical steps toward solving the mess Australian east coast residents find themselves in – surging power prices due to high international coal and gas prices driven by sanctions on Russia, outages at Australian coal-fired power plants, and Australian coal supply issues.
According to the Australian Electricity Market Operator (AEMO), wholesale prices jumped 141pc in the first quarter of 2022 and market commentators are forecasting prices to rise even further, worsening cost of living pressures even further.
For now, the plan includes the final design of a capacity mechanism to guarantee investment in all forms of energy, such as gas and coal but with a clear focus on renewable and energy technologies, and accelerating work on a national transition plan.
But as the Institute for Energy Economics and Financial Analysis (IEEFA) states, Labor’s proposal to explore a capacity mechanism could further increase electricity bills and delay the energy transition.
Johanna Bowyer, IEEFA’s Australian electricity analyst, says instead of a capacity mechanism where electricity customers would pay old power plant generators to keep going, a better idea would be to introduce a Renewable Electricity Storage Target.
“This would encourage investment in new energy storage resources, rather than locking in payments to legacy assets – thereby accelerating the transition to a low emissions electricity system.
“The capacity mechanism would have to be substantially redesigned to make sure high emissions generators do not remain in the system for longer than needed, at the same time as incentivising investment in new, flexible, low emissions energy resources like batteries.”
Other initiatives to reduce bills in the short term include reserving east coast gas for domestic use, a windfall profit tax on LNG exporters, commissioning wind and solar plants more quickly, and implementing energy efficiency benchmarks, Bowyer added.
Potential low-carbon (green or blue) hydrogen demand from the global refining sector could reach 50 million tonnes per annum (Mtpa) by 2050, says WoodMac.
Oil refining is one of the largest markets for hydrogen, accounting for about 32 Mtpa or 30-35% of global hydrogen demand in 2020, the firm said.
Hydro-treating and hydro-cracking are the major refinery processes consuming more than 90% of hydrogen in the refining sector, and they are used to reduce sulphur from finished products, as well as to increase yield of transport fuels, respectively.
However, more than 65% of hydrogen demand in refining is met by hydrogen supplied as a by-product from catalytic reformers and ethylene crackers; this is unlikely to be replaced by low-carbon hydrogen, WoodMac says.
Any hydrogen shortfall is met by on-purpose production from gas-based steam methane reforming (grey) and coal (brown), together accounting for about 32% of refinery hydrogen demand.
Wood Mackenzie research director Sushant Gupta said low-carbon hydrogen has the potential to replace on-purpose hydrogen as a feedstock if low-carbon hydrogen becomes cost competitive and policy support develops over time.
“Potential global market size for low-carbon hydrogen in this segment could be up to 10 Mtpa by 2050 delivering a 10% or 100 Mtpa reduction in overall scope 1 and 2 global refinery carbon emissions,” he said.
“But the real game-changer is in replacing fossil fuels in combustion applications to generate heat and steam.
“This will provide a larger market for low-carbon hydrogen in refining with potential market size reaching up to 40 Mtpa by 2050, and up to 300 Mtpa or about 25% reduction in carbon emissions.
“As such, total potential demand for low-carbon hydrogen in refining could be up to 50 Mtpa by 2050.”
| Code | Company | Price | 1 WEEK RETURN % | 1 MONTH RETURN % | 6 MONTH RETURN % | 1 YEAR RETURN % | Market Cap |
|---|---|---|---|---|---|---|---|
| PGY | Pilot Energy Ltd | 0.021 | 17% | 5% | -65% | -74% | $9,583,415.93 |
| MR1 | Montem Resources | 0.032 | 7% | 3% | -51% | -67% | $8,241,954.11 |
| EGR | Ecograf Limited | 0.395 | 5% | -8% | -40% | -37% | $193,643,387.37 |
| MPR | Mpower Group Limited | 0.031 | 3% | 11% | -28% | -63% | $6,797,533.35 |
| FMG | Fortescue Metals Grp | 21.13 | 3% | 8% | 16% | -7% | $66,382,483,632.08 |
| MEZ | Meridian Energy | 4.23 | 2% | 1% | -7% | -15% | $5,287,287,214.10 |
| CNQ | Clean Teq Water | 0.535 | 1% | -9% | -31% | 0% | $25,013,057.44 |
| NEW | NEW Energy Solar | 0.8 | 1% | -1% | -2% | -8% | $256,470,388.80 |
| HXG | Hexagon Energy | 0.027 | 0% | -7% | -65% | -70% | $13,848,729.33 |
| SRJ | SRJ Technologies | 0.43 | 0% | 0% | 0% | 95% | $32,842,552.90 |
| CPV | Clearvue Technologie | 0.285 | 0% | 6% | 12% | -41% | $59,287,296.32 |
| LPE | Locality Planning | 0.051 | 0% | 0% | -64% | -73% | $8,729,605.54 |
| IFT | Infratil Limited | 7.05 | -2% | -5% | -8% | -3% | $5,054,465,393.75 |
| LIT | Lithium Australia | 0.082 | -2% | -10% | -25% | -29% | $84,903,232.22 |
| CWY | Cleanaway Waste Ltd | 2.84 | -3% | -6% | -3% | 8% | $5,857,748,766.96 |
| KPO | Kalina Power Limited | 0.021 | -5% | -19% | 5% | -43% | $31,818,212.69 |
| M8S | M8 Sustainable | 0.009 | -5% | -44% | -44% | -63% | $3,775,319.64 |
| RFX | Redflow Limited | 0.051 | -6% | 46% | 4% | -21% | $77,747,497.07 |
| GNX | Genex Power Ltd | 0.14 | -7% | 0% | -28% | -42% | $186,998,913.90 |
| TNG | TNG Limited | 0.064 | -7% | -9% | -21% | -9% | $90,247,184.43 |
| FGR | First Graphene Ltd | 0.125 | -7% | -4% | -42% | -48% | $70,004,222.00 |
| AVL | Aust Vanadium Ltd | 0.037 | -8% | -30% | 42% | 68% | $141,433,455.89 |
| EDE | Eden Inv Ltd | 0.012 | -8% | 20% | -40% | -48% | $30,301,847.04 |
| NRZ | Neurizer Ltd | 0.17 | -8% | -3% | 10% | -28% | $162,250,501.72 |
| QEM | QEM Limited | 0.2 | -9% | -17% | 14% | 8% | $24,326,032.40 |
| FHE | Frontier Energy Ltd | 0.22 | -10% | -15% | 69% | 42% | $48,096,615.42 |
| DEL | Delorean Corporation | 0.13 | -10% | -13% | -35% | -40% | $29,122,323.53 |
| NMT | Neometals Ltd | 1.055 | -13% | -19% | 0% | 106% | $594,988,389.66 |
| BSX | Blackstone Ltd | 0.23 | -13% | -22% | -57% | -37% | $117,861,891.25 |
| PH2 | Pure Hydrogen Corp | 0.26 | -13% | -29% | -50% | 13% | $92,363,970.87 |
| VUL | Vulcan Energy | 6.38 | -14% | -10% | -42% | -22% | $892,553,710.20 |
| IRD | Iron Road Ltd | 0.15 | -14% | -17% | -29% | -48% | $131,833,565.16 |
| RNE | Renu Energy Ltd | 0.035 | -15% | -22% | -60% | -60% | $12,395,244.41 |
| EOL | Energy One Limited | 4.815 | -15% | -19% | -22% | -25% | $137,675,360.00 |
| LIO | Lion Energy Limited | 0.032 | -16% | -26% | -55% | -48% | $15,553,023.14 |
| CXL | Calix Limited | 6.44 | -17% | -12% | -1% | 142% | $1,078,806,072.20 |
| PV1 | Provaris Energy Ltd | 0.056 | -18% | -25% | -47% | -25% | $30,602,906.04 |
| LNR | Lanthanein Resources | 0.018 | -18% | -36% | -18% | 16% | $15,918,685.83 |
| HZR | Hazer Group Limited | 0.605 | -20% | -23% | -51% | -42% | $105,883,176.10 |
| ECT | Env Clean Tech Ltd. | 0.018 | -22% | -18% | -59% | -10% | $32,608,781.88 |
| PRL | Province Resources | 0.058 | -29% | -35% | -60% | -59% | $69,489,588.66 |
| PRM | Prominence Energy | 0.002 | -71% | -78% | -78% | -87% | $4,849,217.64 |
| AST | AusNet Services Ltd | 0 | -100% | -100% | -100% | -100% | $9,919,608,018.74 |
| SKI | Spark Infrastructure | 0 | -100% | -100% | -100% | -100% | $5,036,718,783.60 |
Last Friday, AGL said the company had completed a technical assessment of the scope and duration of works needed to return Loy Yang A coal-fired power station in Victoria to service; however, it now expects this outage to extend until the second half of September.
“The outage extension is driven by global supply chain issues and the availability of specialised materials,” AGL said in a market announcement.
“Since the initial outage, AGL has been working closely with its engineers and suppliers to plan and implement the necessary works to enable a safe and reliable return to service.
“Loy Yang A Unit 2 initially went offline on April 15, 2022 following an electrical fault with the generator.
“Subsequent testing determined that the generator rotor had failed and AGL’s preliminary estimate of the unit’s return to service at this time was August 1.
“As a consequence of the ongoing market volatility and the fact that the review of AGL’s strategic direction will not be completed until September, AGL does not anticipate issuing FY23 earnings guidance before the review has been completed.”
Last week, Vulcan launched its sustainability framework, which outlines ESG initiatives, targets, and risks.
The framework listed a few highlights:
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