Australia Energy Market: Current Issues, Policies and Solutions

This report provides a comprehensive analysis of the Australian energy market, highlighting the critical challenges it faces, including high energy costs, policy uncertainties, and the instability of the national electricity grid. It discusses the differences between clean and black coal technologies, the role of petroleum in power generation, and the potential of nuclear power. The report also examines the impact of the Liddell Power Plant closure and the contributions of Elon Musk's energy solutions in South Australia. Furthermore, it proposes solutions to overcome power shortages, such as enhancing energy efficiency, shifting demand, and investing in new generation and storage technologies. The report concludes by analyzing Australia's role in providing energy commodities like thermal coal and LNG, and how energy objectives can be applied to specific projects, emphasizing reliability, affordability, and reduced emissions. Desklib provides students access to similar assignments and study tools.

Table of Contents
LIST OF TABLES........................................................................................................................................ 2
CHAPTER I................................................................................................................................................ 2
1.0 INTRODUCTION ............................................................................................................................. 2
CHAPTER II .............................................................................................................................................. 3
2.0 CURRENT SITUATION OF AUSTRALIA ENERGY MARKET ............................................................... 3
2.0.1 The Critical Problem ............................................................................................................... 4
2.0.2 Liddell Power Plant ................................................................................................................ 4
CHAPTER III ............................................................................................................................................. 5
3.0 DIFFERENCE IN TECHNOLOGIES OF CLEAN AND BLACK COAL: ..................................................... 5
3.0.1 Clean Coal: ............................................................................................................................. 5
3.0.2 Black Coal: .............................................................................................................................. 6
CHAPTER IV ............................................................................................................................................. 7
4.0 PETROLEUM USE FOR POWER GENERATION IN AUSTRALIA: ....................................................... 7
CHAPTER V .............................................................................................................................................. 8
5.0 NUCLEAR POWER OVERVIEW ....................................................................................................... 8
CHAPTER VI ............................................................................................................................................. 9
6.0 NATIONAL ENERGY MARKET OPERATOR: ..................................................................................... 9
CHAPTER VII .......................................................................................................................................... 10
7.0 ELON MUSK’S WORK IN SOUTH AUSTRALIA: .............................................................................. 10
7.0.1 Future Plans To Conserve Energy ........................................................................................ 11
CHAPTER VIII ......................................................................................................................................... 11
8.0 PROPOSED SOLUTIONS TO OVERCOME POWER SHORTAGE ...................................................... 11
8.0.1 Victoria 2020 And Beyond ................................................................................................... 11
8.0.2 Efficiency Of Energy ............................................................................................................. 12
8.0.3 Shifting Of Demand .............................................................................................................. 12
8.0.4 Reduction Of Demand .......................................................................................................... 12
8.0.5 Behind The Generation Of Meter. ....................................................................................... 13
8.0.6 Storage ................................................................................................................................. 13
8.0.7 New Generation ................................................................................................................... 14
CHAPTER IX ........................................................................................................................................... 15
9.0 ROLE OF AUSTRALIA IN PROVIDING ENERGY COMMODITIES: ................................................... 15
9.0.1 Thermal Coal ........................................................................................................................ 16

9.0.2 LNG ....................................................................................................................................... 17
CHAPTER X ............................................................................................................................................ 17
10.0 ANALYSIS AND DISCUSSION: ..................................................................................................... 17
10.0.1 How Can We Apply the Energy Objectives to a Particular Project? .................................. 18
10.0.1.0 First Element: .................................................................................................................. 18
10.0.1.2 Third Element: ................................................................................................................. 18
CHAPTER XI ........................................................................................................................................... 19
CONCLUSION ..................................................................................................................................... 19
REFERENCES: ..................................................................................................................................... 31
LIST OF FIGURES
Figure 1 Energy Commodity Export Values (Source Credit: Department of Industry, Innovation
and Science) ............................................................................................................................. 15
Figure 2 Energy Prices fluctuation graph Source Credit: Bllomberg HIS:RBA ......................... 16
Figure 3 Seaborne Thermal Cost Production Costs (Source Credit: AME Group) ................... 16
Figure 4 Australian Liquification Capacity (Source Credit: AEMO) .......................................... 17
LIST OF TABLES
Table 1 General Investment in National Energy Market ......................................................... 15
CHAPTER I
1.0 INTRODUCTION
The world’s second-biggest exporter of natural gas suffering from severe crises that they even
can’t supply gas to facilitate their own citizens. The world’s richest economies of natural gas
are Australia and USA. The way of managing the resources is the main difference in these
nations. In Australia energy is getting very expensive. The National power system is in a
critical stage that is why the whole nation is suffering from high rates of electricity and gas.
This is a consequence of federal government’s and state government’s uncertain and spit
policies. There was no obvious and constant path to decrease the emission. This uncertain

policy had badly impacted the energy system of Australia and caused considerable instability.
The main points are the stability of the National electricity grid, increase the cost to supply
the gas and new generation’s investment.
1.0.1 Changes to the Report:
We had to change the few outputs and solutions that we arrived in our Advanced Engineering
Project 1. This is due to few changes that have been observed in the Australian National
Energy Statistics. For instance, one of the power stations which was announced and thought
to really help in the additional power production in the state in 2017 was shut down in the
late 2017 due to environmental concerns. Hence, in this report, we have made the changes
in relation to the current statistics.
CHAPTER II
2.0 CURRENT SITUATION OF AUSTRALIA ENERGY MARKET
Currently, there are many rising challenges in Australian energy market that have a high
impact on the cost and dependability of the supply of energy. To address all these issues is
difficult; it needs combine act by the Australian government, regulatory authorities, and state
to offer the most suitable incentive in energy markets. The difficult interaction of government
and private businesses affect the energy supply to residential areas and businesses within the
country. The markets that are affected by these interactions are under the approach of
national co-operative between the governments and engage regulators of state, local and
district. The factors like condition of atmosphere and market, the supply of energy in each
state and international market’s exposure are affected the Australian energy markets (Pears,
2017).
In 2017, many problems have been addressed which were caused by the outdated policies of
energy. The gas industry is running with the help of Australian industry. The policy of climate
is urgent but suffering from controversies between the key policymakers. The export of fossil
fuel is at risk from the international pressure (Dears, 2017). The goal and objectives are
obvious: supply economical, reliable and provide energy services with low carbon to the
business area and households. How to deal and interpret these objectives is also a major

problem. Some see opportunities while rest see risk in it. Investors are eager to protect their
powerful investments. In the meantime, different opponents are rising from many areas and
consumers shout for fairness, right, choice and justice.
2.0.1 The Critical Problem
The problems of energy in Australia is not caused by the processes of the free market but
dominant policies of energy accepted by the liberal parties and labor force. There are three
significant results achieved by the energy policies:
1. Elimination of usage of fossil fuels by increasing energies of wind and solar.
2. To reduce the emission of carbon dioxide power plants from coal-fired are closed.
3. In the New South Wales and South Australia, the expansion of natural gas is
prohibited.
The shutdown of electricity in South Australia that kept the whole area without electrical
energy for more than 28 hours was caused by too dependable on wind energy. The closing of
last power plant of coal-fired also affects the state. The report of 2014 submitted by the
operator of Australian energy market (that runs the energy market on a national level) and
Electranet (that runs the transmission grid of electricity on a national level) expected that if
policies of decarbonization continue than South Australia will suffer the blackout.
In spite of the considerable problem, the government of labor in South Australia still insists
to keep on the wind energy with the aim to supply 50 percent of the district’s electricity. The
state government is taking action because due to the shortage of natural gas industries are
closing their plants. Warning bells for the shortage of power have been ringing because many
power stations have been closed in Australia.
2.0.2 Liddell Power Plant
Regulators of Australian energy market predicts if the energy of AGL is not succeeded to
complete all the phases of its plan after the shutdown of Liddell power plant, the New South
Wales will need extra 900 megawatts of dispatchable generation capacity. AGL decided to
close the Liddell power plant in 2022 and change the coal plant with renewable, storage of

battery and for peak period gas power will use. The alliance of Turnbull government and the
public wanted AGL to increase the Liddell operating life for at least 5 to 7 years.
Canberra request is refused by AGL and continue with their own plan. To replace the Liddell
power plant the additional capacity will come from Newcastle power plant (300 MW), site of
New South Wales, coal plant of Bays water (110 MW) and from renewable (1800 MW). Till
AGL successfully roll out all phases of its plan, the need for additional generation capacity in
NSW is required. After the closure of Liddell power station there is still a possibility of a
shortage of electricity, so AGL should be fully committed.
To decrease the risk of power shutdown, further 900 MW of dispatchable resources of power
will be added to the market of electricity by 2027-8. During the peak hours, to supply the
reliable electricity to the different region is only possible when additional dispatchable power
generation is added. The 1600 MW coal power plant, Hazelwood, Victoria’s has been closed
also. Removed 6% Australia’s base load and 25% Victoria’s. the development to supply the
natural gas to different parts of Australia is not possible with few coal power plants.
CHAPTER III
3.0 DIFFERENCE IN TECHNOLOGIES OF CLEAN AND BLACK COAL:
3.0.1 Clean Coal:
The term "Clean coal" indicates the extraction of carbon emissions by the process of burning
coals and the storing process which works under the earth. (australian atlas of mineral
resources, n.d.). Carbon captivation and capacity work, yet is costly to fabricate or to retrofit
onto old plants (Lenzen, 1998). We'd have to complete significantly more captivating and
storing it to have any kind of effect in engaging overall carbon outflows. There are different
disadvantages related to consuming coal, as well (Riedy & Diesendorf, 2003). Throughout
recent years, "clean coal" has been a political pipe dream. The thought coal—our most
seasoned, dirtiest vitality source—could be reshaped in a way that gives us a chance to
continue utilizing it without doing as such much damage to the earth (Turner, 2001).

The expression "clean coal" has been connected to numerous advancements, going from wet
scrubbers, which expel sulfur dioxide from the coal-created gas, to coal washing, which expels
soil and shakes from coal before it's sent to a production line. Speculatively, the term could
be connected to anything that makes coal plants more efficient, like modernization effect
(Van Dijk et al., 2001). Be that as it may, when individuals discuss clean coal nowadays, they're
normally looking at something many refer to as carbon captivation and capacity (Turner,
2001).
3.0.2 Black Coal:
The black coal is called black considering its dark shading. It fluctuates from having a brilliant,
sparkling gloss to being exceptionally dull and from being moderately difficult to delicate. It
has higher vitality and lowers dampness content than dark colored coal (Bird, Haynes, &
McAneney, 2014). Well known eras of are Permian age (around 250 million years of age),
however, bring down rank, more youthful stores of Triassic, Jurassic and Cretaceous ages are
likewise imperative (Clifton & Boruff, 2010). Permian dark coal from New South Wales and
Queensland is sent out in huge amounts to Japan, Europe, South-East Asia, and the Americas
(Lenzen & Murrary, 2001). The real utilization of the black coal is for creating power in control
stations, where it is thumped and consumed to warm steam-producing boilers. Coal utilized
for this procedure is called steaming coal. In 2008 77% of the power created in Australia was
delivered by coal let go control stations (incorporates the black and the browner coals) (Bird
et al., 2014).
A few kinds of black coals are reasonable for coke-production. These coals are called coking
coal and when warmed without air create gases and coke. Coke is a permeable strong made
chiefly out of carbon and powder. Great quality coke is hard, has a high squashing quality, and
is essentially utilized as a part of impact heaters that deliver press (Van Dijk et al., 2001).
Numerous natural chemicals, including tars and feed stocks for influencing different plastics,

to can be set up from the side-effects of coke and gas generation. Some coal is utilized
principally to get these items (Lenzen, 1998).
CHAPTER IV
4.0 PETROLEUM USE FOR POWER GENERATION IN AUSTRALIA:
A great part of the vitality traded from Australia is utilized for creating power abroad; three-
fold the amount of warm dark coal is sent out as is utilized as a part of Australia, and all the
uranium generation is traded (Lenzen & Murrary, 2001).
Australia additionally trades a lot of resources in the form of mineral items. the exports for
the aluminum metal, alone implant costs approximately 27 TWh of power for every year,
which is around 11% of the nation's aggregate gross creation and that's a huge amount that's
Australia producing (Riedy & Diesendorf, 2003). In the year 2015 around 34 TWh was utilized
as a part of non-ferrous metals (aluminum smelter generation represents the majority of this),
half of the business aggregate of 77 TWh. (australian atlas of mineral resources, n.d.)
Most of the development in esteem including producing in the previous 20 years have
originated from enterprises which are vitality and especially power escalated. The
development has happened in Australia because of generally low power costs combined with
a high unwavering quality of supply and the closeness of common assets, for example,
bauxite/alumina (Wilkinson, 2011). Australia is an individual from the Organization for
Economic Cooperation and Development (OECD) aggregate which elevate approaches to
enhance the monetary and social prosperity of individuals around the globe. (australian atlas
of mineral resources, n.d.)Australia is one of just three net hydrocarbons sending out
countries in the (OECD) and is the biggest exporter of the coal supplies. Australia additionally
sends out flammable gas, however, is a net shipper of oil (Lenzen & Murrary, 2001).
Australia is supplying vitality assets both universally and locally as it has vast assets in coal,
URANIUM and flammable gas. The OIL, GAS AND ENERGY ventures are real supporters of the
Australian economy. The KPMG Eco and tech expressed that "the oil business initiated $6.2
billion for every annum to the GDP. This is 66% the commitment of the materials, apparel and
footwear enterprises and double the ranger service and angling businesses”.

Australia is known to be the largest investor in the oil, gas and vitality businesses and with
proceeded with populace development and the consistently expanding requirement for
vitality, future monetary development is a distinct. Not all regions of the nation have been
completely investigated or misused for oil and gas holds. Australia has a solid development
potential in extending creations and expanding exportations (Bird et al., 2014).
Outside ventures contribute fundamentally to the financial development of Australia. Its
protected, steady and honest political and administrative arrangements and techniques make
Australia an appealing speculation opportunity. COAL SEAM GAS alone has gotten $31 billion
in speculations inside four months of creation in the year 2010 while different nations have
needed to sit tight years for financial specialists to contribute towards ventures (Riedy &
Diesendorf, 2003).
CHAPTER V
5.0 NUCLEAR POWER OVERVIEW
Although Australia has significant stores of uranium and is known to be one of the world's
principal exporters of the mineral, it doesn't itself misuse atomic power (Van Dijk et al., 2001).
This is regardless of the nation having a stable political and financial condition
notwithstanding generally stable topography, a vital factor as for the area of atomic power
stations and for putting away radioactive waste (Lenzen, 1998). Some unmistakable
Australian earthy people have pushed the utilization of atomic vitality as a low-carbon
contrasting option to consuming non-renewable energy sources, and a few nations –
especially China and India as mentioned in the (IAEA, 2011a) – are extending their atomic
enterprises with 65 atomic power reactors under development around the world (IAEA,
2011b) (Lenzen & Murrary, 2001). In Australia, in any case, the tenor of the verbal
confrontation about the likelihood of utilizing atomic power stays quieted. (Wilkinson,
2011.)Of the two noteworthy political gatherings, Labour’s longstanding approach is to
restrict its improvement, while on the other side the Liberal Party has for the most part upheld
the idea (Riedy & Diesendorf, 2003).

Australia has proved to be a dependable and focused player in the oil, gas and vitality
enterprises and is a strong supporter of CORPORATE RESPONSIBILITY PROGRAMS, natural
preservation and reclamation ventures and COMMUNITY DEVELOPMENT PROGRAMS. (Van
Dijk et al., 2001). Australia likewise has moral and controlled exchanging understandings
concerning the exportation and utilization of uranium and will just supply it to nations who
have consented to reciprocal shields arrangements with Australia, agreeing to directions that
it might just be utilized for power age and may not be utilized as a part of weaponry or fighting
creation (Clifton & Boruff, 2010).
CHAPTER VI
6.0 NATIONAL ENERGY MARKET OPERATOR:
AEMO’S thought about to produce as much energy which would deliver it to all Australian’s.
The Australian market operator is responsible for delivering the gas and electricity in markets
and is also operating the power systems, following includes:
• The national energy market, which is responsible for interconnected power systems
in the eastern Australia and south-eastern sea board.
• The whole sale electricity market of Australia and power systems which is in western
Australia.
It is also operating the following:
• The Victorian declared the wholesale gas market, and the transmission of Victorian
gas systems.
• The natural gas services by bulletin board
• The western gas of Australian by bulletin board.
• The Moomba gas supply hub and wallumbilla which is in Queensland and south
Australia.

• The short-term trading market of wholesale gas which is in Adelaide, Brisbane and
Sydney.
CHAPTER VII
7.0 ELON MUSK’S WORK IN SOUTH AUSTRALIA:
• As it is known to be the biggest particle of lithium ion batteries are now currently
allocated in the South Australia which is now being conveyed fourteen days back,
effortlessly whipping the guarantee the Musk of Elon made of "100 days or it's free."
(Wilkinson, 2011). The government of South Australia takes note by checking out of
the blue, breeze vitality could be guided towards framework all day, every day
enhancing the framework's dependability, regardless of the breezy whether is going
or not (Turner, 2001). The battery of 100MW cultivate has sufficient stockpiling ability
by controlling about0 30,000 homes.
• dispatch of todays arrives shortly after a managerial period of testing that observed
the battery's capacity for both in charge too, and from the National Energy Market of
Australia and go about as an originator. The company of NEM merges links around
Australia and 40,000km of transmission lines. Power packs of tesla were associated
with Hornsdale windfarm products, which is few hours by the north of Adelaide.
(australian atlas of mineral resources, n.d.)
• "The completion of the world's biggest lithium-particle battery in record time explains
that a reasonable, viable vitality arrangement is conceivable," the Tesla in an
announcement said, "We all are pleased to be a part of the South Australian’s
sustainable power source of future, that seeks the task gives an archetypal for the
after-future representation of organizations located all over the globe (Clifton &
Boruff, 2010).
• The person Tesla explains the importance of the battery that will benefit in
illuminating the energy of states that lack hardships and help within midyear top
burdens. South Australia has been incapacitated by vitality issues and endured a far-
reaching power outage last September. That occasion started a very politicized discuss
about vitality of security, which is with government of Federal, explaining possible

faults of sustainable power source which covers the use, while the others indicated
the transmission of lines and the towers which are toppling over because of extreme
climate (Clifton & Boruff, 2010).
7.0.1 Future Plans To Conserve Energy
To forecast the commodity exports of Australia it is important to increase the supply and
demand of global energy. These both factors give the positive impact on local economy. To
plan the future it is necessary to keep in mind the trend of long-term that support the demand
of global energy. There is a significant level of doubts that how will the demand of global
energy be change, the more we look the future the more that doubts becomes. China is the
largest emerging economy where high growth of energy demand noticed. Though, increase
in economy is predicted slow as these economies establish (Saunders, Cassidy, & Roberts,
2016).
CHAPTER VIII
8.0 PROPOSED SOLUTIONS TO OVERCOME POWER SHORTAGE
A power engineer Peter Farley and president of Victoria branch of Australia’s Engineer has
proposed a plan to overcome the crises of energy in Australia.
8.0.1 Victoria 2020 And Beyond
As the Liddell power plant, Hazelwood and Anglesea have already been closed, so the main
concern was Victoria will be having an insufficient supply of electricity. Yearly supply and peak
demand are the factors to be questioned. The yearly demand of Victoria’s electricity is 50
GWhr and 15 GW demanded at the peak time. Victoria is having 8.5 GW of coal, dispatchable
gas and local hydro additionally it shares 1.2.GW to a snowy scheme. South Australia, New
Castle, and Tasmania are the interconnected capacities of Victoria. The power demand of
super peak time cannot be fulfilled by energy flow from South Australia. There must be 10 to

15 % reserve capacity to balance the system if any failure or congestion grid occurs. Victoria
requires more sources to supply high-reliability power. The efficiency of energy, shifting of
demand and reduction of demand (usually combined together and act as a response to
demand), at the back of meter generation, storage, and the new generation (Potter, Smith, &
Ludlow, 2017).
8.0.2 Efficiency Of Energy
The economy of Germany is 30% industrial while in Victoria only 10%, we utilize more energy
per output unit. Apparently, there is a vast scope of the efficiency of energy. Currently, the
plan of energy efficiency is adequate but governments of state and local are not agreed to
enforce the standards of air-conditioned and refrigeration in a building. After 5-6 years, 2-4%
per year use of energy will be reduced by the Victoria. Ultimately the demand for peak time
will also be affected. The target is to reduce the peak demand by 150-250 MW every year.
There will be no considerable effect on the next 3 years but influence the need for future
generation (Blair, 2018).
8.0.3 Shifting Of Demand
In California,50,000 houses were selected and a plan was set to reduce the peak demand by
just 2 kW per house. Rush hour rewards is also an example of demand shifting. In Austin, run
time of air-conditioned reduced about 60% in 50 days by the rush hour reward system. To
start these systems houses and buildings have to pre-cool before the peak demand and later
during peak demand slowly temperature will drift up by 2C. This plan is also effective to switch
off time insensitive loads such as a dryer, pumps of pools and heaters (Marshall, 2017).
The premises of commercial and cool stores can also follow the same technology. As
hardware is already installed in pool pumps and A/C, so it is considered to plan for 100MW.
This hardware can also be installed in different commercial and industrial areas.
8.0.4 Reduction Of Demand
Demand reduction is usually term as a response to demand. For this large number of users
decided to decreased load on the time of peak demand. It seems that Alcoa has this contract.
It is possible to perform an auction for 700-800 MW. It would not be used in this summer, but
it depends, from when and where solar and wind batteries come on flow. Alcoa will run at full