Power Up is Stockhead’s fortnightly look at all the news and moves driving ASX energy stocks.

Is Australia on the verge of an energy crisis like that which hit Europe?

After all, wholesale energy prices have surged and at least one smaller retailer has advised customers to switch to competitors because prices were about to go up.

There is some truth to this as dedicated domestic gas supplies in the east have been steadily declining, enough that newly renamed Woodside Energy Group (ASX:WDS) boss Meg O’Neill has also gone on the record as saying that the company could be in position to replace gas from the ailing Bass Strait with LNG from the west, if only there were terminals to receive them.

Other say the salvation of the east coast gas market will come from developing new shale or coal seam gas basins. Though here we again run into the twin issues of the resulting gas being neither cheap nor timely… but that’s really beating a dead horse at this point.

Expect to see the usual crazies pop up to propose that we build a pipeline across the continent to link the two gas markets, nevermind that previous attempts were found to be overly expensive and time consuming – along with the added risk of methane leakage, which is a BAD THING given that it is actually more of a greenhouse gas than CO2.

As pointed out by several media sources, the solution is actually already baked into our legislation, namely the emergency “Australian Domestic Gas Reservation Mechanism” that would allow the Government to force gas exporters in Queensland to reserve part of their gas for the domestic market – something that the West Coast has been doing for decades now, and look where gas prices are at there (Hint: Nowhere as high as the east).

This is an extreme measure and could cost Australian a lot of currency (both literally and figuratively) with its LNG customers, which could explain why new Climate Change and Energy Minister Chris Bowen is reluctant to make the move, saying that it would come into effect until the beginning of next year if it was implemented.

LNG could provide indirect solution to energy crisis

But there might be a stop-gap measure that could provide some relief to the looming, potential energy crisis.

While most of the LNG produced by exporters on the east coast are locked into long-term, oil-linked contracts, they do produce a small number of spot cargoes that are sold on the open market.

It doesn’t look like much at first glance. According to Energyquest, of the 31 cargoes exported by the Gladstone producers in April, just one was sold on the spot market.

It doesn’t sound like much until you consider that a typical LNG tanker can store 125,525 cubic metres of LNG or about 2.6 billion cubic feet of gas, or about 10% of Victoria’s monthly consumption during winter.

While not a massive amount, it still represents a significant chunk of domestic demand and if this was reserved for domestic use, it will go a long way towards addressing the more immediate gas supply issues that the East Coast is facing.

Whither now for AGL?

We all know by now that AGL’s (ASX:AGL) board and senior management has been forced to step away from its coal demerger with egg on their faces – or with heads rolling, in the case of chairman Peter Botten and managing director Graeme Hunt.

Pressure from tech billionaire Mike Cannon Brookes, investors, and climate experts meant the company was no longer confident of securing the 75% approval that the scheme would have required to pass.

This has left the company scampering to find a new direction, one which is likely to see early closures of its coal-fired power plants.

On the gas front, the impending closure of its Torren’s gas plant will leave AGL with just two smaller gas plants – Barket Inlet and AGL Somerton.

The investor antipathy towards fossil fuels combined withdrawal of the proposed Dalton plant and lack of any plans to start construction of the permitted Tarrone plant make for some serious question marks over the future of the planned 250MW Newcastle Power station.

Many questions remained unanswered about the path forward for AGL but it’s worth noting that the company does have a portfolio of hydroelectric, wind and solar power plants as well as storage batteries, meaning that it is no stranger to renewables.

But it still leaves many questions about the direction the company will take, though some clarity may come the strategic review it is currently carrying out.