Electrical suppliers could see their prices rise as power shortages continue to hit the market.
As the power sector becomes increasingly reliant on generators, the price of electricity has soared, with suppliers including HFC, AGL, Energex, and Energem facing a price increase as demand for generators continues to outstrip supply.
In the first quarter of 2018, the prices of generators hit an all-time high of $US3,000 a megawatt hour, with generators now costing $US5,000 per megawhour, according to data from the Australian Energy Market Operator (AEMO).
In the year to the end of March, the average price of a megawatts of power fell from $US1,813 to $US813, according the AEMO.
The peak of power prices is typically at the end or beginning of the year, when electricity suppliers are already feeling the pinch of higher power prices and the end to the Christmas and New Year shopping season.AEMo said on Tuesday it expected prices of power generators to remain high for some time, but that prices were likely to remain relatively stable for the coming years.
The AEMo report said that a major driver of the power prices was the rising costs of building new power plants, as new generators are required to be designed to accommodate the higher power demands.
It said this also played a role in the rise in the price.
“We expect that the costs of new power stations will continue to grow in the coming decades, and that they will have a disproportionate effect on the industry’s overall costs,” the Aemo said.
“The increased costs of existing power plants and the resulting capacity shortages will lead to higher power costs for electricity users, as well as to reduced demand for the supply of electricity.”HFC’s CEO, Paul Brannigan, said the increased cost of building and maintaining the infrastructure was an issue that was impacting all electricity suppliers.
“It’s a matter of urgency that we have to do something about this, and we need to get to a point where we can all be confident that the new infrastructure can be made to work, and it can be a cost-effective solution to meet our needs,” he said.
Mr Brannigans company has said it is planning to take advantage of the current lower price of power in 2018 and 2019 to cut its costs, but the company has warned it could still be more than a decade before the cost of electricity in Australia falls.
“With the recent economic downturn, it is clear that the cost structure for electricity in the market is very different than in recent years,” Mr Brannings said.
He said the company would be investing in a new generation of power stations and new generation facilities to provide the power that customers needed, but it was also looking to reduce its power bills.
“To do this, we are going to need to do a lot of investment in our existing capacity,” Mr Bannigans said.
“We are looking to do that in 2018, 2019, 2020, 2021, and beyond.”
But that is going to require us to get a lot smarter about what we are building, and the cost that we are paying for it.
“That is where we are in the process of taking on a lot more responsibility and making a lot better decisions, and as we get better at that, we will have better products, and better systems.”