The Prime Minister Malcolm Turnbull has attacked the states for higher gas prices, after the Energy Market Operator warned of potential electricity shortages.
Mr Turnbull announced he wants an urgent meeting of gas company executives to ask them to “explain how they plan on addressing the threat to their customers”.
He added that the “very concerning” electricity situation Australia faces has costs rising and is putting investment at risk.
The Australian Energy Market Operator predicted in its latest report that power shortfalls are on the way unless support for more gas-powered electricity generation is offered.
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Addressing a business summit in Sydney on Thursday, Mr Turnbull said that the market needed to be reformed if the issue was to be fixed, and accused mainly Labor state governments of blocking gas resources.
“Policymakers have put ideology and politics ahead of engineering and economics, introducing large amounts of variable energy - wind and solar, in particular - without the necessary storage and additional transmission infrastructure,” Prime Minsiter Turnbull said.
“We again call on the states to lift their restrictions on gas exploration and development.”
The regulator predicted that NSW, Victoria and SA will be impacted in the summer of 2018-19 and warned that the tightening of the domestic gas market will affect the sector dramatically.
Watch Matthew Warren from the Australian Energy Council speak about the gas shortage:
It warned that commercial and industrial businesses were at financial risk, and even new supply – because of rising gas production costs – would provide little relief.
“Strategic national planning of gas development has never been more critical for maintaining domestic energy supply adequacy across both gas and electricity sectors,” Chief Operating Officer of the Australian Energy Market Operator, Mike Cleary, said.
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Opposition Leader Bill Shorten blamed a lack of national policy leadership as the main contribution to the instability of Australia’s electricity market, and said it was Malcolm Turnbull’s job to fix it.
"He needs to do much better and this is a problem of his weakness and his lack of leadership on a national energy market," Mr Shorten said.
The Climate Council’s energy expert Andrew Stock said while the idea of using existing gas resources makes sense, many of the assets are already inefficient and decades old.
“We know gas is a contributor to emissions and worsening climate change," Mr Stock said. "It makes more sense to accelerate investment in renewables like solar and wind, coupled with grid scale storage.”
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