Oil settled above US$100 a barrel this week as combatants in the Iran war set their sights on energy infrastructure and analysts braced for long-term impacts.
Israeli missiles struck Iran’s South Pars gas field, the largest such facility in the world and which Tehran shares with Qatar. In retaliation, Iran struck a Qatari refinery. Later in the week Israel said it would no longer attack energy infrastructure.
Closer to home domestic energy prices appeared resilient to global oil and LNG spikes with the draft Default Market Offer expected to see electricity prices falling thanks to lower wholesale energy costs and increased output from wind and batteries.
Energy analysts and consumer groups cautiously welcomed the Australian Energy Regulator’s draft Default Market Offer pricing matrix, which has different breakdowns for time of use or fixed tariffs. Small businesses are set to be the biggest winners, with nominal price falls of around 10-15% and up to 21% under the draft in some parts of NSW, while residential customers would see falls of up to 10%. The reformed DMO also included new pricing for the government’s upcoming Solar Sharer Offer with free energy in the middle of the day and up to 4 cents/kWh higher in other parts of the day.
The Australian Energy Regulator said it was closely monitoring developments in the Iran war given the DMO modelling cut-off date was before the crisis ignited on February 28.
Policy
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The federal government is mulling reforms to the Petroleum Resources Rent Tax (PRRT) and introducing a new tax on windfall gas company profits, according to the ABC. A document prepared by the Department of Prime Minister and Cabinet (PM&C), asked Treasury to model "new levy options" and also requests options to reform corporate income tax.
A Norway-style Fair Share Levy (FSL) would have generated $1.1 billion in additional revenues since the start of the Iran crisis, The Superpower Institute argued in an analysis that notes the existing Petroleum Resource Rent Tax (PRRT) has only raised $1.4 billion per year since 2019. This “perverse” situation means that “while Australian households and businesses are being stung by extremely high fuel prices caused by the crisis,” TSI chair Rod Sims said, “gas companies are reaping extraordinary profits from this same crisis.”
As the fuel crisis saw a growing number of outlets running out of petrol and diesel, Prime Minister Anthony Albanese appointed former AER chief Anthea Harris to a new role as Fuel Supply Taskforce coordinator. The Taskforce will sit within the Department of the Prime Minister & Cabinet; facilitate coordination on fuel security and supply chain resilience across state, territory and federal governments; update policymakers about the current fuel supply outlook and domestic fuel distribution; and act as a single convening point for fuel supply and forward planning to get fuel to the regions where it’s needed.
NSW became the first state to ban new coal mines, laying out a 25-year vision for coal in the state. The policy change will see the NSW government prohibit future greenfield coal development; relinquish government-held coal exploration titles; abolish the Strategic Release Framework for coal; and continue to support applications for coal exploration adjacent to existing exploration and mining licenses. The Mining and Energy Union called the ban on new mines “disappointing” but welcomed the report’s provision of clarity for workers.
Australia’s R&D action “keeps adding more funding to a broken system”, the authors of the government’s 12-month strategic examination of R&D said. They called for “strategic, comprehensive and orderly change” to R&D policy settings, warning the country is currently over-reliant on resources and commodity exports as opposed to “the brain power of the country”.
The government’s $7.2 billion Cheaper Home Batteries Program will likely boost household battery storage by 4.1GWh, or 31% more than if the subsidy did not exist, according to new analysis from Rennie Advisory.
Capital
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Data centre giant AirTrunk contracted two energy infrastructure firms in a $300 million deal to build a large-scale BESS adjacent to its 320MW/1.28GWh SYD3 data centre, which is being built in western Sydney and is expected to be the Asia-Pacific region’s largest data centre when it goes live next year.
Implementation of 7GW of offshore wind generation off Gippsland, Victoria would drive a $5/MWh reduction in wholesale prices across the entire NEM between 2033 and 2040, according to a new Jacobs analysis commissioned by Star of the South. Savings would rise to $15/MWh by 2040, the study found – a $5.2 billion total saving in total – with Victorian energy bills forecast to decline by $151 per year and $84 across the east coast. The analysis also links the offshore wind to a 934km reduction in necessary transmission infrastructure – a reduction of $4.9 billion – as well as a further reduction of $1.2 billion in transmission operating costs and $2.5 billion saved from reduced reliance on gas and hydrogen use at peak times.
The Queensland government commenced market sounding for the $200 million North West Energy Fund, which it has positioned as supporting the CopperString high-voltage line linking Mount Isa and Townsville. More than 20 energy developers, generators, electricity distributors, suppliers, users and local councils have been engaged to participate in projects across Mt Isa, Cloncurry, Julia Creek and Richmond.
Weeks after the financial close and breaking ground on NSW’s $900 million Blind Creek Solar Farm and Battery, renewable energy retailer Flow Power signed a foundational offtake agreement with developer Octopus Australia.
Western Australia’s Wind Energy Manufacturing Co-Investment Program WA is now open for applications, with two streams providing funding for either ‘market entry’ projects – those of between $20,000 and $60,000 and designed to help companies break into the wind energy supply chain – or ‘market growth’ projects of between $500,000 and $1 million, with funding designed to help manufacturers in that supply chain scale up. The $8 million program is administered by the Advanced Manufacturing Growth Centre, and will be open until 20 May 2027.
Regulation
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This Australian Energy Market Commission took a step towards strengthening the regulatory framework for gas pipelines to help prevent a real-world scenario where customers still using gas when many others have transitioned are left carrying the can. Responding to a rule change request from consumer groups the Justice and Equity Centre and Energy Consumers Australia, the AEMC issued a directions paper outlining a set of incremental changes to address the issue. They include requiring networks and the regulator to demonstrate how they have considered long-term energy transition risks; clearer guidance on the use of depreciation; tightening the justification requirements for capital expenditure; and guidance on tariff design across a wider range of transition scenarios.
Essential Energy flagged an upcoming ring-fencing waiver request to the regulator for a trial that would give retailers access to white-labelled 7kW EV chargers mounted directly onto new composite pole streetlights. The project is intended to leverage publicly accessible infrastructure to fill in coverage gaps, particularly in regional areas, where private investors have yet to build up enough charging infrastructure to support widespread EV adoption.
Nexa Advisory lodged a rule change request garnering the support of both the Clean Energy Council and the Australian Energy Council. It would see new protections codified into the National Electricity Rules to prevent regulated network monopolies using their advantages — including access to customer data and regulated revenue streams — to dominate emerging markets that would otherwise attract private investment and innovation.
The AEMC published a rule change request from the Justice and Equity Centre, which would amend current transmission-centric National Electricity Rules to require AEMO to “co-optimise the augmentation of all elements of the energy system… in its identification of the optimal development path”. The AEMC will publish a consultation paper to facilitate consultation on the consumer-focused measure, likely later this year.
 Projects
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The proposed 780MW Supernode BESS, to be located in Woodstock south of Townsville, was waved through environmental approvals after a determination that its construction is not a controlled action.
NSW’s Bellambi Heights BESS will have revenue certainty after Danish energy trading company InCommodities signed a $200 million agreement with Vena Group that will earn revenues from the 204MW/510MWh project through market participation and energy market arbitrage. The deal for the battery storage system, in Beryl, NSW – Vena Group’s fourth Australian BESS – was announced during the Danish Royal State Visit, and will tap Denmark’s expertise in energy risk management and trading to support stabilisation of the Australian grid when the project goes live mid next year.
A massive surge in probable renewable energy projects pushed the renewables pipeline out to 20,799MW as of the end of February, according to the latest Clean Energy Regulator (CER) Large-Scale Renewable Energy Target data report. Added to the 5,967 MW of committed projects and 28,798MW of accredited projects in operation, Australia’s total renewables pipeline has reached 55,564MW – more than all current generation combined. Some 16MW of new power stations, totalling 12MW of capacity, were approved in February.
WinDC and Armada forged a strategic partnership to deploy modular, portable data centres that will be co-located at Australian renewable energy projects and make use of the excess capacity they generate. The behind-the-meter architecture saves the sites from having to deal with grid congestion, with the new partnership set to see 11MW of modular data centres deployed at wind, solar, and battery sites across NSW, WA and elsewhere.
A 78,000m2 ‘AI factory’, to be built by Datagrid in Makarewa, near Invercargill at the southern tip of New Zealand’s South Island, has gained full resource consent from area councils. The site will become the region’s second largest user of power, with expectations that it will consume 280MW when it goes live. It took five years for Datagrid to navigate environmental and cultural approvals for the project, which includes an undersea cable that is seen as a boon for local businesses.
Energy systems
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Australia’s coal fired power stations recorded a “staggering” 108 outages between October and February – including 18 scheduled and 90 unplanned breakdowns, the latest report from Reliability Watch showed. The outages mean that on average 5.3GW – 25% of coal fired power station capacity – “was unavailable at any point during the period,” the report found, noting that maintenance of the stations is also “becoming significantly more problematic”.
Climate
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The Australasian Centre for Corporate Responsibility (ACCR) appealed the recent Federal Court decision against it in ACCR v Santos Ltd, signalling a new round in court proceedings that date back to 2021.
Research
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Dozens of global ‘mega-leaks’ of methane gas are pouring greenhouse gases into the atmosphere and could be easily fixed, UCLA researchers have reported in an analysis that noted many of the sites on its new top 25 list “often result from poor maintenance and can be simple to fix.” The largest leak – in Texas – is spilling 5.5 tonnes of methane per hour, the equivalent of a million SUVs while concentrations of sites in Turkmenistan, Venezuela, and Iran suggest systemic failures to conduct routine maintenance.
CSIRO researchers have produced the world’s first proof-of-concept quantum battery, with a design that has a multi-layered organic microcavity that allows it to be charged wirelessly using a laser. The prototype proves theoretical predictions about quantum batteries and validates a new technique for “rapid, scalable charging and energy storage at room temperature,” quantum science and technologies science leader Dr James Quach said, highlighting research findings that confirm a “counterintuitive” quantum effect that means batteries charge faster the larger they get.
People
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Woodside Energy appointed Elizabeth Westcott as CEO and managing director, cementing her position after serving as acting CEO since the December departure of Meg O’Neill.
Looking ahead to next week, International Energy Agency CEO Fatih Birol will speak at the National Press Club, the Senate Select Committee on Information Integrity on Climate Change and Energy will hand down its final report, and AEMO will deliver the latest Gas Statement of Opportunities.
