Australia: Energy prices in the country are expected to reach astronomical levels in the near future

This is the warning issued by the Australian Energy Market Operator (AEMO), as essentially stated in a relevant report published today.

According to the report, costs for consumers will skyrocket, as wholesale electricity prices have risen to unprecedented levels.

Specifically, in the quarter ending June 30, the average price was $264 per megawatt hour. This represents an increase of 203% compared to the first quarter of the year. At the same time, it is a price six times higher than the long-term pricing trend.

However, the picture is similar for wholesale natural gas prices in the eastern states of the country. To be precise, the average price for a gigajoule of natural gas rose to $28.40 in the second quarter of the year. This is a record price, as the corresponding price for the same period last year was $8.20%.

It should be noted that electricity pricing is also linked to natural gas prices.

It should be noted that the phenomenon of dramatic increases is not solely due to the war in Ukraine.

The increased natural gas prices in Europe, which are also pushing up Australian prices, began well before the war, as Russia had restricted gas supplies in an attempt to impose its view on the Nord Stream 2 pipeline.

This is a pipeline that bypasses Ukraine, transporting Russian natural gas to Germany via undersea pipelines in the Baltic Sea. Russia was in dispute with Germany and the EU, demanding control not only over the gas but also over the infrastructure that transports it, which is prohibited by EU law. Nord Stream 2 has not yet become operational.

Of course, now, with the war in Ukraine and whatever Russian moves regarding gas availability in Nord Stream 1, the price has skyrocketed even further.

At the same time, increased energy demand from all countries following the pandemic also caused prices to skyrocket.

Another factor weighing on prices in Australia is that, for various reasons such as regular maintenance and the gradual decommissioning of coal-fired power plants, there was insufficient electricity supply in the grid. As a result, natural gas-fired power plants were used more, with all that this entails in terms of cost.

For this reason, AEMO imposed a price cap at one point, which resulted in production companies withholding electricity from the market, leading to the unprecedented intervention of the Regulatory Authority to suspend the operation of the Energy Exchange for a few days. the operation of the Energy Exchange.

The problem is that prices have skyrocketed, and according to experts, they are likely to remain high for quite some time.