Source: https://www.aer.gov.au/industry/registers/charts/seasonal-peak-demand-regions

I believe the energy debate – electricity specifically – is not boring because the normies (people with a superficial understanding of the electricity system) have finally started to realise they’ve been conned.

They’ve been assured by ‘experts’ that electricity prices will be lower in a high renewable system while retail electricity prices have steadily increased. The December 2025 St Vincent de Paul tariff tracker report shows the gory details.

Source: https://cms.vinnies.org.au/media/og0daixn/nem-tariff-tracker-dec-2025.pdf?path=og0daixn%2Fnem-tariff-tracker-dec-2025.pdf

I spoke to St Vinnies energy program director Gavin Dufty on the Powerlines podcast about his tariff tracker report.

Powerlines

The Energy Transition's Hidden Cost Transfer Nobody Talks About

Energy policy is being sold as a simple transition, but the reality is a messy fight over costs, fairness, and who gets left holding the bill. Ben Beattie sits down with Gavin Dufty, National Energy Director at St Vincent de Paul and board member of Energy Consumers Australia, to unpack the hidden machinery behind Australia’s electricity and gas systems…

Listen now

17 days ago · 20 likes · 3 comments · Ben Beattie

Analysts

Mirroring the increasing consumer interest in energy an array of market analysts have appeared with the majority aligning themselves with the politically correct ‘transition’ narrative. For the average consumer their assurances have worn thin and the experts found wanting.

In stark contrast is Aidan Morrison. Undoubtedly the standout performer in the energy debates Aidan has been landing body blows on the transition-complicit energy bureaucracies since he was challenged to ‘read the document’ by Simon Holmes a Court in 2023. The ensuing Twitter debate brought him onto The Baseload Podcast courtesy of yours truly.

Aidan’s ensuing body of work now encompasses submissions on all the major reports, appearances in parliamentary inquiries and committees, detailed reports for the CIS and regular television and panel appearances – always talking sense and pointing out the massive crippling flaws in our energy policies. Aidan is one of few analysts shining a light on the popular narrative. You’ll easily find him on X and LinkedIn.

Despite Aidan’s rapid ascension and his consistent output the energy bureaucracies soldier on seemingly unaware the tide of popular opinion is turning against them.

Absurd contradictions underpin the narrative spun by the ‘experts’ and the normies are starting to realise it.

Supply and demand

The electricity supply and demand situation is different in each state.

I am most optimistic for QLD that has dispatchable capacity exceeding its historical maximum demand. With a fleet of relatively young coal-fired generators that are cheap to run, plus a decent haul of gas-fired generators, QLD has ample generation capacity for the next decade at least.

One footnote is the potential closure of the Gladstone power station in 2029. This loss of supply will be roughly offset by the loss of demand when the adjacent aluminium plant also closes – a glass half empty prognosis which I think is accurate.

There is also a question around data centre electricity demand. A lot is made of the potential for data centre demand, but I believe the prognosis is unlikely we’ll get facilities with demand in the hundreds of MW like those in the USA.

A data centre needs stable electricity, optical fibre connectivity and also a water supply for its cooling systems. Compare that with Australia’s high electricity cost, limited fibre connectivity and sparse water supply and you can see why I believe Australia is not a natural environment for a large data centre rollout. I believe most data centre growth will occur in sites close to major cities adding a relatively modest growth to electricity demand.

AEMO publishes a spreadsheet with details on the NEM’s grid-connected generator fleet and we can interrogate that to compare historical demand in each region against the available generation capacity. I’ve left out batteries ‘in commissioning’ and all future announcements because almost none of it is dispatchable capacity. You can argue the case for batteries to be labelled dispatchable capacity, but batteries are fundamentally an intermittent source.

Source: https://www.aemo.com.au/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-planning-data/generation-information

NSW is the state with the largest population and highest electricity demand. It’s also about to be the most interconnected state with the existing links into VIC and QLD to be joined by a direct link into SA.

NSW is already in the situation where peak historical demand exceeds dispatchable capacity, with SA and VIC soon to be in the same boat if current plans eventuate. NSW is far worse off when Eraring closes. This is a problem for other states too because NSW is directly connected to VIC, QLD and (soon) SA and NSW supply shortages will create price volatility in these connected states.

NSW vs QLD

Compare the difference in a single day between QLD and NSW in the charts below. We are now in the lower demand shoulder season and the black operational demand line omits the demand met by rooftop solar. The solid blue line represents the combined coal fleet nameplate capacity.

Even in this period of suppressed electricity consumption the combined maximum output of the NSW coal fleet cannot meet demand. The NSW case becomes even more concerning when you consider the closure of Eraring would reduce the grey area in this chart by around 2,000 MW.

QLD above, NSW below

Source: AEMO NEMWEB

AEMO’s demand and capacity forecasts for NSW are included in their electricity statement of opportunity (ESOO) reports.

Source: https://www.aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/nem_esoo/2026/2026-electricity-statement-of-opportunities.pdf?rev=4f2e73fbd906456288198fdbc24b335a&sc_lang=en&hash=8BC15B81DC0725EA49821C9D301AAB9E

The ESOO chart above shows AEMO’s demand scenarios for NSW over the next decade. NSW demand is shown steadily increasing, reaching the historical high of 14,580 MW in 2031.

AEMO’s statements on ‘resource adequacy’ rely on orchestrated consumer energy resources (CER) which is code for home batteries being operated for the benefit of the grid rather than the battery owners. I find this outcome unlikely and believe including this in the calculation is a sign of desperation.

It seems obvious to me that Eraring must be kept available to meet evening demand for years longer. The question then is how will that be paid for? Origin own Eraring and can’t be forced to operate the plant at a loss. If the state government wants it to stay open (as it must) then there will have to be some deal made to keep it open.

We’ve already seen the Minns government make Eraring an offer in 2024 which was not taken up, but the softer wholesale prices may make that offer more attractive. Keeping coal online longer keeps prices down longer which in turn prevents new generation being built. The cycle must continue until a government builds a new coal-fired power station. Hopefully Mike Newman is listening!

Side note: QLD’s highest ever grid demand 11,159 MW occurred on a 22 January 2025 while NSW maximum 14,580 MW occurred on 1 February 2011.

QLD above, NSW below

Prices

While ‘experts’ note that 2025 wholesale prices have softened, their claims that wind and solar are the primary cause don’t hold much water. Propping up the narrative is made more difficult by acknowledging the high availability of coal generators relative to recent past years and the stable gas prices, for all of 2024 and 2025, and dipping to 2016 levels this year. Note this chart is not adjusted for inflation so seeing 2016 prices in 2026 means the 2026 prices are actually quite a bit lower when adjusted for inflation.

Source: https://www.aer.gov.au/industry/registers/charts/sttm-quarterly-prices-including-ex-post

Despite the statements above I believe there is now enough data to allocate some credit for reduced price volatility to grid-scale batteries, although again the results are different in each state.

SA has seen the highest Q1 and Q2 quarterly volume weighted average prices (VWAP) despite also having a very high penetration of grid-scale batteries to ‘firm’ their wind and solar fleet. It turns out that short periods of very high prices have an outsized impact on the quarterly average. This is because high prices occur with high demand. The more frequent periods of very low prices occur when there is almost no grid demand.

At time of writing SA’s running quarterly VWAP for Q3 2026 is sitting just under $95/MWh (red dashed line), compared with QLD and VIC at $68/MWh.

Volume-weighted average price is important to understand because retailers buy most of the wholesale electricity at fixed prices in advance, some up to three years ahead. The five-minute price matters in the context of how it impacts those fixed prices.

Supply scarcity during brief periods of high demand results in very high five-minute prices. Price ($/MWh) multiplied by demand (MWh) looks like this mathematically:

You can see that high price multiplied by high demand results in high dollar value. It is this high dollar value that retailers must hedge against with the electricity they buy in advance at fixed prices. Sometimes there are clouds and wind droughts and to meet their retail demand the MWh comes more from gas and hydro than coal, wind and solar. That can cost retailers more than they expect, so they also buy a smaller amount of MWh at higher prices to avoid the cripplingly high costs of having to buy it on the market on the day, for example at $20,000 /MWh.

Note that several retailers exited the market in 2022/2023. The AER’s 2023 state of the energy market report makes grim reading.

Source: https://www.aer.gov.au/system/files/2025-07/State%20of%20the%20energy%20market%20%28SOTEM%29%202023.pdf

Future

Here’s where I put it all on the line and give readers the opportunity of saying I got it all wrong!

1. Eraring will remain operating until at least 2030, possibly longer if we see government changes. It may need a subsidy such as the Minns deal, it may be able to shutter or derate a unit similar to how Liddell was babied along for several years

2. Yallourn I believe has to close in 2028. It’s just really old and bordering on decrepit. That age brings safety challenges that cannot be ignored. Even so it may have some units kept alive by derating and partial closure, again similar to Liddell

3. Gas-fired generation will fill the gaps in both VIC and NSW. Recall NSW recently built The Hunter Valley gas turbines (Kurri Kurri) and Tallawarra B. Gas supply will be the issue with prices potentially spiking again. The federal government domestic reserve may be the heavy hand that hides the short-term pain.

4. Chirs Bowen will exit the energy minister role and go full time in the UN

5. Albanese will delay the federal election as long as possible until May 2028

6. One Nation will have ups and downs but on average will increase in popularity

The summary is that NSW, VIC and SA are in trouble because they do not have enough reliable (dispatchable) electricity generation to meet demand all the time. At times they do, but sometimes they do not. This is the heart of the problem.

It’s GenCost season again, where outrageous claims are made, seemingly cemented in fact and buttressed against criticism by the historical good name of the CSIRO. Every year the circus reconvenes to push the narrative that a high renewables system is the cheapest possible option, and every year the realisation dawns on more people that this is wrong.

I’ve been involved in reviewing and discussing GenCost since its first edition back in 2018-19. The email extract below is one example and the responses from author Paul Graham were equally enlightening and disappointing.

I’m sure there are plenty of similar examples of obvious questions sent to Mr Graham by experienced people scratching their heads at the methodology, assumptions and conclusions. In a more carefree time I would be more likely to brush off GenCost as irrelevant, but like the red-pilling of comedian David Hughes who has suddenly become Albo’s social media nightmare, the energy debate has burned away any good will I had for these bureaucrats.

Source: Straight Talk podcast

In my opinion the leadership at these organisations have deliberately tipped the scales in favour of renewables, and I believe the examples below prove it.

CSIRO’s GenCost uses unrealistic high capacity factors to favour renewables, while loading coal (and nuclear) with unrealistic cost assumptions. Put together these inputs effectively prop up the renewables narrative.

Source: CSIRO GenCost report 2025-26 final

AEMO’s ISP is sold as ‘cheapest path’, but in reality only fits new transmission projects to the federal government’s 82% renewables energy target, deliberately excluding any attempt at a baseline cost analysis for comparisons.

Source: AEMO podcast

AER’s DMO methodology has been altered to eek out small gains for consumers by squeezing retailers to the brink.

Source: AGL submission to draft DMO

AEMC modified the National Electricity Objective (basically the energy bureaucracy’s constitution) to effectively elevate emissions reduction above cost and reliability.

Source: https://www.energy.gov.au/energy-and-climate-change-ministerial-council/working-groups/energy-transformation-working-group/incorporating-emissions-reduction-objective-national-energy-objectives

Chris Bowen’s battery subsidy is helping the wealthy opt out of contributing to the electricity system while the electricity system is growing larger and more expensive and is pouring billions into the Chinese supply chain. The head of the AEMC recently said on a podcast that she doesn’t understand how retailers can stay in business.

Source: RenewEcomedy podcast

Despite all the attention given to GenCost (yes I can see the irony!), can anybody picture developers consulting GenCost to check if their new wind farm is costing too much, and retailers using it as due diligence on their new solar contract? Please let me know if I am incorrect. GenCost is entirely a fabrication of the green bubble infecting our energy bureaucracy. It’s a Canberra specialty.

Let’s be clear – every federal and state government policy (notably excluding Queensland since June 2025) is pushing in the same direction. The effects on electricity bills are obvious, and it is remarkable the system has remained as reliable as it has for so long. This is thanks almost entirely to the amount of baseload coal-fired generation we still have in the system.

In the coming years the folly of treating energy supply as a political football will expose New South Wales and Victoria. The former is concerned about Eraring Power Station whose owner (Origin Energy) has a closure date of August 2027 in the 2025 annual report. The latter is desperate to hang onto Yallourn Power Station which is still called on daily to produce its maximum output.

Source: Origin Energy 2024-25 Annual Report

We can all acknowledge that a private company cannot be forced to run an asset at a loss – these companies are allowed to close a loss-making asset. But blackouts are not acceptable for a state’s energy minister, despite the calls of academics interviewed by the ABC.

Source: ABC news, Daniel Rossetto

It is difficult to find a polite adjective to accurately describe my opinion of this line of thinking.

There are two parallel realities competing for supremacy. The first reality is where physics and economics intersect in our power bills. We see it, we are concerned about it, but the those who are supposed to know the details continuously reassure us that costs are going down.

This is the second reality, a narrative spun by the media, the politicians, the bureaucracies, the corporations, and the academics – I refer to them collectively as The Essential Class and The Essentials never have to worry about going without.

In the case of the ABC’s academic, is it possible he has a subsidised solar and battery system that insulates him from the spiralling costs and any uncertainty about a supply of continuous electricity? Would it be likely his employer would be spared (future) electricity rationing due to its essential status?

You may think it ridiculous to imagine gated communities with continuous low-cost electricity only accessible by swipe card. A swipe card granted on condition you don’t speak up or challenge the narrative. Those who do ask questions have their swipe card access revoked, their lanyards rendered useless. Without it you pay full price and get what’s left after The Essentials have met their needs.

I suggest a light-weight version of this is already occurring and that without serious change a much darker dystopia is inevitable.

Sam Berridge: https://www.linkedin.com/in/sam-berridge-8150a02a/

Sarah Lawley: https://www.linkedin.com/in/sarah-lawley-70945318/

Ben Beattie: https://www.linkedin.com/in/ben-beattie-99a18719a/

and here too: https://x.com/EnergyWrapAU

To avoid any doubt I am sceptical of current energy policy, I believe net zero emissions is a physical impossibility, and all emissions reduction policies should be scrapped immediately.

My rationale for this position is simple: I’d rather live in a wealthy country with 2.4999 °C of warming than a poor country with 2.4998 °C of warming. The measures required to achieve serious emissions reduction are not sustainable for an advanced economy. I’m happy to discuss any of this, so if you see me don’t be afraid to ask about it. I also don’t hold grudges unless the other party is desperate to maintain that status!

We are living through a particularly dynamic period in domestic and global politics and we should expect this trend to continue. A key component of this period is what I call an awakening. I describe this awakening as a lowering of trust in politicians and bureaucracy across the board which is directly responsible for the rise of so-called populist politics.

My personal journey to low trust was accelerated by COVID (Royal Commission please), reinforced by The Voice, and cemented by subsequent domestic and global events. A short list includes the ongoing US election saga (voter ID please), the UK gang rape inquiry (there’s no nice way to say it), and the outrageous election backflips of the current Australian federal government.

Looking back it’s hard to believe that Brexit and Trump #1 occurred a decade ago in 2016. In 2017 Scott Morrison held up a lump of coal in parliament and in August 2018 displaced Malcolm Turnbull to become Prime Minister, going on to defeat Bill Shorten in the 2019 federal election.

Shortly afterwards Morrison officially signed Australia up to net zero and AUKUS, apologised to Brittany Higgins, changed the national anthem, oversaw the 2020 COVID response with the creation of ‘national cabinet’ and $90 billion in COVID spending.

Losing to Anthony Albanese in 2022, Morrison made way for Peter Dutton, the Liberal Party lost more seats and suffered through more leadership changes, culminating in the present leadership of Angus Taylor.

Now in 2026 we’ve seen the rise of One Nation across the country and the Albanese budget universally detested. Jim Chalmers said he is going to reshape the economy and I believe him. It’s scary. Productivity is down, costs are high, immigration and housing dominate the news headlines.

The reset

The low trust in governments is directly proportional to the rise of populist politicians. The Libs have a tough legacy of poor performance to overcome. Gaining the trust of voters is hard to win and should be cherished. A lot of that trust was lost during the Turnbull reign, and again during Morrison’s second round. Pauline Hanson’s Fire the Liar campaign could well be the end of Albanese and set the scene for a minority government with Pauline Hanson, Angus Taylor and Matt Canavan horse-trading for PM.

In my opinion this is a political reset long overdue. Peter Dutton squandered the window of opportunity he had to do the necessary reset on his own terms post-COVID and now it’s out of all our hands. The times are a-changing and politics will be different from here on.

Donald Horne’s full quote from 1964 – referring to the lucky country – goes like this:

“Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people’s ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise.”

This sentiment remains accurate 60+ years later! We are still the lucky country despite a long period of uninspiring leadership, and I firmly believe that just like the old adage ‘high prices fix high prices’ that poor politics eventually fixes poor politics.

However this can only occur as long as we care about making good arguments, we care about facts, and we care about the freedom to say whatever we like and criticise who and whatever we like.

We must be free to criticise political parties and their leaders. I think a primary role of politicians is to receive criticism, especially from their own constituents and party members. A good politician will use that criticism to fuel their thinking, eventually resulting in better arguments. Making good arguments is how elections are won, ergo the politicians that win elections have the best arguments. That’s how it should be anyway, but here we are.

Lastly the internet is equally wonderful and horrifying, but occasionally some gems appear, such as this political cartoon by American Colin Wright.

The phenomenon so artfully described above draws me to the following conclusion: a conservative voter who wants a roughly centre outcome cannot vote for a fence-sitting middle politician. I believe this is true for several reasons.

1. There is not really a middle on any political topic, just variations of one side or the other

2. Anybody who chooses ‘the middle’ on everything can’t be trusted to hold a firm opinion on anything

Politics is described as the art of the possible, or in other words compromise is the machinery of politics. If you start in the middle a compromise immediately takes you to one side.

An effective politician therefore has to be firmly / clearly on one side of the topic with a clear margin between them and the middle. Likewise a conservative voter cannot afford to vote for the politician claiming to hold the middle ground, because every compromise away from conservative is inevitably towards the radical progressive left.

The radical left understand this concept even if they lack the ability to articulate it. Anybody who has stood alongside the blue-hairs at a polling booth knows they believe their own propaganda with all the might their pitiless hearts can muster. To them fairness and equality just means we are all equally poor. The ultimate outcome of progressive politics is cruelty, the opposite of compassion.

Thoughts on the QLD state government

Doing ok, B+ in this era of D- is something to be celebrated. Since they are doing well I expect a scandal of some sort is brewing and the release will no doubt be timed to coincide with the next election campaign.

Thoughts on Trump

He is necessary. America is a great force for good in the world and Trump takes the big issues head on. I don’t give a toss about his past personal life. His public statements on politics have been extremely consistent for the last 40years. He’s right about immigration, defence, energy, health, education, foreign aid, mainstream media, Taiwan, China, Russia, Iran to name a few topics.

His tariffs are not great for Australia but are a necessary reset required to halt globalisation - in my opinion. We could learn from it. It’s simplistic to say so, but the bumper sticker version is ‘we need America more than we need China’. Unfortunately some of our recent leaders have been publicly rude to Trump, the world leader with the biggest economy, biggest budget, and biggest ego of them all.

I’d rather take Trump to a footy game than many of our recent Prime Ministers.

Wrap up

The rapidly shifting political environment offers risks and opportunities. For us mere voters the system can appear messy and useless. A stabilising force amid the chaos is being able to sit down and chat about it. I often ask people what they think about a topic, then sit back and listen. Sometimes people can be well informed about one topic but totally naïve on another. That’s ok. What we agree on is more interesting than what we disagree about, and honestly most Australians are pretty close to agreeing on most things (except maybe the most stubborn Greens members).

I note that left-wing progressives Drew Hutton (co-founder of the Queensland Greens) and Dave Hughes (ABC-centric comedian) are now outspokenly critical of the current federal Labor government.

I realise all this is very serious, so to finish on a light-hearted note I have attached two images:

1. a relatively benign internet meme somebody sent me of Albo

2. a photo of me at a Greens event (Max Chandler-Mather) before the last federal election, wearing a bright pink hat with COAL in big letters on the front

Light-hearted benign internet meme of Albo, source The Internet

Myself at a Max Chandler-Mather talk in the Griffith FDC prior to the 2025 federal election

Source: Facebook

I will show why Richard Denniss’ small grain of truth applies only to a very specific set of conditions. A factually correct headline would include these conditions:

Japanese Government collects more tax from Australian gas than Australian Government does from PRRT in some years

The detail I’ve added is missing from the original headline.

Source: https://australiainstitute.org.au/post/japanese-government-collects-more-tax-from-australian-gas-than-australian-government/

I’ve done the calcs on Denniss’ claims and the fact check is shown below. I have used these years to align with the ATO gas tax inquiry submission. The methodology and any grey areas are detailed further down. Considering the headlines it will be inconceivable to some that these figures are so close.

Readers can decide for themselves if a AUD 209 million shortfall over four years is good, bad or – in my belief – largely irrelevant. Taking 2019-20 and 2020-21 as an example, this was a particularly low revenue period for the oil & gas sector due to global commodity price suppression following COVID lockdowns. Denniss pays no mind to commodity prices.

I discussed Japan’s LNG import strategy with Damian Coory on his show The Other Side.

https://www.youtube.com/watch?v=Fdcu2CKuYCw

I would be perfectly justified in saying that ‘most years’ our Japan-bound PRRT exceeds Japan’s import taxes. We can play these games forever.

The problem I have with Denniss’ claim is the implicit assumption there are no other gas revenues collected by the Australian government. For example 10% of the 25 Mt exported to Japan each year comes from Queensland and pays state royalties, not the commonwealth PRRT.

ATO data shows that LNG taxation exceeded AUD 12 billion in 2022-23 and AUD 10 billion in 2023-24. The gas lobby Australian Energy Producers submission to the gas tax inquiry says that 2024-25 tax receipts totalled AUD 21.9 billion. I believe the large company tax figures are deliberately ignored by Denniss to keep the data out of the public realm as much as possible. There’s a narrative to construct after all.

Separate to the headline, Denniss’ report makes misleading comparisons and ignores the entire point of the PRRT scheme – it allows projects to recover their investment from the massive development phase before taxing the same projects heavily in the profit phase. Along the way many billions are paid in company taxes, tens of thousands of highly paid people are employed for decades (they all pay taxes) and supporting industries are created. All with minimum subsidy.

It would be nice if we could guarantee unlimited cheap gas for ourselves along the way, but that is a separate topic.

Denniss also uses the report as an opportunity to misquote the ATO – a repeated error corrected on the record during the gas tax inquiry.

Denniss’ claims have been repeated so often that any regular person who googles ‘japan gas tax’ will be easily convinced it is all true. Even politicians with or without close ties to the Australia institute use the headlines to earnestly express their totally unbiased and well-researched opinions to their adoring fans.

Source: Facebook

We know why the usual suspects repeat the lines by rote, but how does the head of a supposedly well-respected think tank release a report with incorrect statements? If it’s accidental then Denniss could be accused of being lazy or incompetent. If the errors are on purpose there’s more sinister motives. It’s at best misleading and should be called out by more in the media.

Greens Senator Steph Hodgins-May, seen here chairing the gas tax inquiry and stating mistruths is even married to a greens politician.

Inside Denniss’ report we are presented with an overview describing Japan’s import taxes on coal and other petroleum products. The claim here is that Japan collects AUD 0.7 billion from Australian LNG, clearly less than the AUD 1.4 billion PRRT. At this stage even Denniss’ own report doesn’t support the headline.

At the end of the overview following a snide claim about ‘it is unclear’ etc we are told again that Japan gets more from taxing Australian gas than Australia’s PRRT. In my opinion this taxation debate is a gambit with the ultimate aim to end the fossil fuel industry altogether.

https://www.theguardian.com/commentisfree/2023/jan/11/as-long-as-australia-fails-to-transition-away-from-fossil-fuels-its-climate-policy-is-meaningless

https://insightplus.mja.com.au/2025/40/governments-addiction-to-fossil-fuels-catching-up-with-us-killing-us-says-senator-david-pocock/

Konrad, former teacher and now professional opinion-giver, also chimes in on the gas is free message.

There are two primary questions required to fact check Denniss:

a) How much tax is collected from Australian LNG on arrival in Japan

b) How much tax is collected from Japanese-bound LNG in Australia

The Australian Taxation Office’s submission to the April 2026 gas tax inquiry shows that in the four years from FY2020-21 to 2023-24 our gas exporters paid over AUD 24 billion of company tax and almost AUD 6 billion in PRRT. For the Australia institute’s headline to be correct Japan would have to collect over AUD 30 billion on Australian gas imports alone.

Source: https://www.aph.gov.au/DocumentStore.ashx?id=95472f3a-3ff2-45cd-a9a6-e881f99cfdc3&subId=788514

We’ve established that Denniss’ headline is not what’s claimed in the report and is clearly untrue. Same goes for the statements made by the chair of the inquiry and several participants.

Calculating Japan’s petroleum import tax on Australian LNG – methodology

To understand in more detail how much import tax is collected by Japan from Australian LNG I used the Japanese data portal that shows monthly LNG imports by country.

Relevant fact: Japan’s LNG import taxes are JPY 1,860 per tonne (AUD 16 - 20 per tonne depending on exchange rates) and have been for years.

I used an online converter to get the average JPY to AUD exchange rate for each month and calculated the monthly import taxes on Australian LNG. The results are that Japan collected about AUD 2.374 billion in import tax revenue from Australian LNG across 2020-21 to 2023-24 (around AUD 0.6 billion per year).

Denniss’ calculation does not appear to factor in exchange rates.

Here’s what my process looks like:

https://opengov.jp/en/economy/energy/lng-imports/

Calculating Australian PRRT on Japan-bound LNG – methodology

To get a result here I used a simple approach broken down by year:

- Get the total PRRT for all LNG each year

- Get the proportion of LNG sent to Japan each year

- Apply the proportion to the PRRT each year

Total PRRT for each year is available from the ATO submission shown above.

The proportion of LNG sent to Japan is found by taking Australia’s annual exports to Japan and dividing by Australia’s total LNG exports. The exports to Japan are shown above. Australian total exports are shown in the Energy and Resources Quarterly reports from the office of the Chief Economist.

Then we end up with this:

Grey areas

QLD LNG exports to Japan do not pay PRRT, they pay royalties to the state government instead. To convert GJ to tonnes LNG you multiply by 52. So $9/GJ ~ $450/tonne. Gladstone port data shows QLD exported 7.7 Mt LNG to Japan in the reference period at a rough average price of $17/GJ (from the Energy & Resources Quarterly data above). Note that contract rates may be lower.

The state royalty on the Japan component of QLD export LNG comes to about AUD 0.3 billion.

https://qro.qld.gov.au/royalty/calculate-petroleum/rates/

I’ve used exchange rates that are average per month. This is better than a single total over multiple years but still allows errors to creep in.

Conclusion

The Australia institute headline is factually incorrect. A grain of truth lies in some very specific conditions when considering a specific portion of Australian LNG taxes and it depends on the year. In my opinion the Australia institute’s report, which goes on to repeat other factual errors, misquotes the ATO, and makes misleading comparisons that should disqualify them from the debate. It’s disgraceful and offensive this naked shoddy activism gets such prominent coverage.

No doubt some readers will differentiate between PRRT and company tax, saying that a royalty is the cost of the raw product while the company tax is the cost of doing business. I don’t disagree, but there are some relevant arguments why the PRRT is designed this way, and that mostly comes down to the cost recovery of the projects.

Even a decade in these projects still have tens of billions in debt and have a combined interest bill over AUD 5 billion per year. The scale of these costs must be acknowledged. Norway does it by passing the cost and risk to taxpayers. Australia has chosen to acknowledge these costs in the design of the PRRT scheme.

Other designs of taxing resources exist, there are plenty of reasons why Australia should encourage debate on the methods of taxation.

But the Australia institute can’t be part of it.

I think that sums up the various angles, if I’ve missed anything let me know.

I only watched a couple of the Senate’s gas tax inquiry sessions – Richard Denniss from the Australia institute and Cecile Wake from Shell. My first impression watching Wake’s refusal to state revenue and volume figures, dutifully captured by the activists and blasted across social media, was she could do better.

And then she did. Wake spent a glorious 6 minutes exposing Australia Institute misinformation on Hansard while Sarah Hanson-Young tried and failed to shut her down.

https://www.aph.gov.au/News_and_Events/Watch_Read_Listen/ParlView/video/4519947

Wake was a highly competitive pentathlete in her younger years and has risen to the top job in Shell Australia. She’s no idiot. By contrast Sarah Hanson-Young is married to the former director of the Australia Institute – Ben Oquist. Inquiry panel member David Pocock’s wife Emma is a former staffer for Hanson-Young and Richard Denniss, current head of the Australia Institute, is a former chief of staff for Bob Brown. The green roots go deep.

Denniss has helpfully written a ‘gas tax explainer’ and stuck it on the internet for everybody to see. Denniss’ position is that higher taxes will encourage gas producers to redirect export gas to the domestic market resulting in excess supply and lower prices.

In this writeup we’ll examine Denniss’ theory and see if it can work.

Source: https://thepoint.com.au/explainers/260323-the-case-for-a-gas-export-tax-explained

Before we dive into the gas stuff I have to pay some attention to this fabulous example of misdirection. Here’s the full statement:

“Governments in Australia and around the world change tax and other policy settings all the time. For example, the Queensland Government recently significantly increased its coal royalties without triggering a collapse in coal exports.”

I am applying Hitchens’ Razor to the first part i.e. a claim asserted without evidence can be dismissed without evidence.

Governments in Australia and around the world change tax and other policy settings all the time.

Whether they do or not, this is an unsubstantiated assertion. I could just as well make the claim that governments around the world hardly ever make changes to their resource royalty arrangements. Who would be correct? I could even use the often cited Norway as an example of stable tax settings. Could Denniss offer some supporting evidence for his claim? We’ll likely never know.

For example, the Queensland Government recently significantly increased its coal royalties without triggering a collapse in coal exports.

The Queensland government under the short-lived Steven Miles imposed large increases to coal royalties in 2022. By comparison the NSW coal royalty rates consist of flat rates from 8.8% to 10.8% of the sale price.

Impacts of the increased royalty regime will always be debated, but the reality is tough times now for coal miners with several mines either mothballed or closed outright e.g. Cook Colliery (QCoal), Saraji South (BHP Mitsubishi Alliance - BMA), Bluff Mine (Bowen Coking Coal), Burton Complex (Bowen Coking Coal), Wilkie Creek & Mavis Downs, Millennium Mine, Vulcan South (Vitrinite).

Commodity prices and the vagaries of international trade also have significant effects on resource project viability. Is the volume of coal exported even relevant in this context?

The point of this sidebar is to highlight that Denniss’ claim that tax and royalty changes have no effect are laughable. Of course it has an effect. Jobs, investment, raw product – it’s all impacted.

Queensland Treasury data shows some of the changes just in the last year with coal exports down 21.7%, a ‘mere’ $13 billion. No effect Mr Denniss?

Source: https://www.qgso.qld.gov.au/issues/3526/exports-qld-goods-overseas-202504.pdf

For more on the Queensland coal royalty debacle I recommend two articles by Mark Ostwald.

Mark Ostwald

Queensland's Coal Royalty Gamble: A $12 Billion Policy Miscalculation

Queensland's aggressive royalty system generated billions in short-term revenue but may have triggered an investment drought that could cost the state far more in the long run…

Read more

a year ago · 2 likes · 6 comments · Mark Ostwald

Mark Ostwald

More Beer Please

1. The Full Tax Stack…

Read more

5 months ago · 4 likes · 2 comments · Mark Ostwald

Returning to gas we’ve identified the mechanism at the source of Denniss’ argument – higher export tax lowers domestic prices – is actually just excess supply.

The argument exposes Denniss’ shallow understanding of the physical gas system.

Let’s assume for a moment that the threat of high export taxes would incentivise gas producers to redirect supply to the domestic market. There are two sides to this equation – supply and demand. Where is the supply and where is the demand?

Supply

First we’ll identify logically where the gas must come from for Denniss’ scheme to have any chance of success.

The only gas exports on the Australian east coast are out of Gladstone, the three LNG plants (2 trains each) under various joint ventures with the primary owners Shell, Origin and Santos. The source of the gas is the Surat Basin coal seams in central Queensland (and occasionally further afield when an LNG train is running short!). So Denniss’ redirected export gas can only come from the three Queensland LNG producers.

We’ll put aside for the moment the challenges of a federal government taxing a state resource. PRRT changes in 2019 removed onshore projects from the PRRT and are unlikely to go back in.

There’s plenty of gas in the Queensland ground – nobody disputes that – it’s a fabulous resource that unfortunately is worth zero unless somebody is willing to spend a lot of money getting it out. Lifting costs in the Surat are estimated at $8.50/GJ by the ACCC, including state government royalties. Personal experience says that is a fair estimate.

Source: ACCC gas pricing inquiry

We have established the source of Denniss’ gas is Queensland, therefore it follows the gas must be moved to a market. And where is the primary gas demand in Australia? It’s Victoria….. oh shit!

Demand

Baseload winter demand in Victoria (excl gas-fired generation) persists above 900 TJ, greater than the sum of all other states in any season.

Add in the gas consumed in power stations during winter and Victorian peak winter gas consumption exceeds 2,000 TJ. At the same time Victorian gas resources are depleting and the crux of all headlines around ‘gas shortages’ becomes this – the pipeline from Queensland is full during winter.

That full pipeline is shown by the red line in the chart below.

Source: AEMO GSOO 2026

Pipes

Gas can only get from Queensland to Victoria via the South-West Queensland Pipeline. That pipe has a capacity of 512 TJ/d and length of 937 km.

The southern end of SWQP is Moomba in South Australia where the pipeline is split into the Moomba-Sydney Pipeline (489 TJ/d, 2081 km) and the Moomba-Adelaide Pipeline System (249 TJ/d, 1184 km).

Victoria is downstream of MSP and MAPS through another pipeline from Adelaide to Iona (300 TJ/d, 691 km) or via Culcairn to Wollert (218 TJ/d, 260 km). There’s also the Eastern Gas Pipeline (35 TJ/d, 800 km) linking Sydney to Gippsland and then onto Melbourne via the Longford-Melbourne Pipeline. There are other gas pipes in there, but you get the picture.

Source: https://www.aemo.com.au/energy-systems/gas/gas-bulletin-board-gbb/data-gbb/interactive-map-gbb (the numbers are actual flow rates at the time I took the screenshot).

It is easy to see that the SWQP limits Denniss’ theory of ‘more gas to market’ to 512 TJ/d. Sure there’s storage and other supplies and that all works fine, but the entire Victorian system relies on gas delivered from adjacent Longford, not remote Queensland.

To read more of the gory details try the helpful Victorian Gas Planning Report series by AEMO.

https://www.aemo.com.au/energy-systems/gas/gas-forecasting-and-planning/victorian-gas-planning-report

Most people will understand that a pipeline capacity is fixed and can’t be changed without massive cost. Think it’s difficult building a new transmission line over farms? Try convincing people to take a 1m diameter steel pipe full of pure methane 2m below the ground at 9,000 kPag. Consider the cost of getting a pipeline under roads, creeks and across mountains. QGC sold their 500 km export pipeline for $6b in 2014.

If you don’t get the problem with Denniss’ argument by now, let me be clear: gas from Queensland can only get to market in Victoria by pipeline. The pipeline to Victoria is already full in winter. No amount of extra gas can get to Victoria when the pipeline is full.

Ships

What about ships? It is technically possible for gas to be pulled from under the farms of central Queensland, piped at high pressure to Gladstone, converted to LNG, shipped to Melbourne, offloaded through an LNG import terminal and used to offset Victorian peak demand. LNG import terminals are relatively simple facilities and the rest of the infrastructure already exists after all.

Since Denniss’ argument is about cost, let’s analyse the shipping option.

Using ACCC estimates for cost of shipping we get around AUD 1.40/GJ which to be fair is probably cheaper than the tolling charged by the gas pipeline operators. The second cost is the liquefaction which chills the gas until it shrinks to a liquid. LNG is liquid methane shipped at atmospheric pressure.

A typical LNG train is rated around 4 Mtpa and Australia has a total of 22. Six are in Gladstone. Using ACCC numbers we see the cost of piping high pressure gas to Gladstone (1.50/GJ), converting into LNG (6.00/GJ) A LNG import facility would expect to charge a toll (1.00/GJ) bringing the extra cost of shipping LNG to Melbourne approaching 10.00/GJ on top of the lifting cost (8.50/GJ).

So we can see that getting ‘excess gas’ from Queensland to Victoria by ship would incur break-even costs around AUD 18/GJ, far greater than the average AUD 12/GJ seen through 2024 / 2025. Also considering the relatively small volumes (compared to exports) the economics are not in Denniss’ favour.

Another shipping hurdle is cabotage. While foreign ships can carry interstate trade they require special licenses and have to pay the crew Australian equivalent wages while complying with Australian safety regulations and other regulations. Existing cabotage rules would increase the shipping costs further.

Summary

An objective assessment of Richard Denniss’ argument – tax exports to force export gas into the domestic market, therefore lowering gas prices – shows it is logistically impossible, even if gas producers did curtail exports and make that gas available locally. There would be some extra gas sometimes, but it would not be available where it can make a material difference to cost.

Excess supply is still the mechanism that lowers prices, it always has been and always will be.

How about this for a plan: get some gas from Victoria. That eliminates any need for extra pipelines, extra shipping, extra import terminals (all costs). It also provides that extra supply where it’s needed.

Domestic gas will get cheaper if we have more than we need. The mechanism is correct. But extra supply will not be created by extra taxes. Increasing taxation does not increase production.

Denniss’ argument doesn’t stack up.

Finally I ask readers to think about the word ‘fair’. It’s a word bandied about by the activists but there’s nothing more than surface attention given to what it means. There’s plenty to discuss around what exactly is ‘fair’ in terms of royalties.

Why do governments take resource royalties on resources consumed domestically? Doesn’t that mean we pay twice for the use of ‘our’ resources? Is that fair?

I don’t think Richard Denniss and his cronies at the Australia Institute give a fig about fair or reasonable. They are focused on shutting down the resource industries. They know this scare campaign won’t result in higher taxes, but I don’t believe redistribution of gas company revenue is their ultimate aim.

In my opinion the outcome they want is exactly what’s occurring – heaps of attention on gas, lots of misinformation, a witch hunt senate inquiry – all to frighten away new investment and delay planned investment.

Recall this plan for coal: https://www.parliament.qld.gov.au/Work-of-the-Assembly/Tabled-Papers/docs/5516t761/5516t761.pdf

It’s being applied to gas.

Addendum 29/4/2026
A reader comment expressed disagreement that the coal royalty changes had affected QLD coal exports. The QLD government makes all the data public here, called 2025 calendar year—Coal sales statistics:

https://www.data.qld.gov.au/dataset/annual-coal-statistics/resource/c522fcaa-89d7-4c76-bd6e-064d39617d38

If you download the xlsx file and generate a simple pivot chart you can obtain this graphic showing an overall declining trend in metallurgical coal export tonnes.

With thermal coal removed the combined metallurgical coal figure is still declining.

We can look to QLD budget papers for a deeper understanding of the impact from royalties and prices.

https://budget.qld.gov.au/files/Budget-2025-26-BP2-Revenue.pdf

Coking coal prices in the budget are quoted at USD 190/t. Converting by 0.75 we get AUD 253/t, putting met coal squarely in the elevated 30% royalty bracket imposed in 2022.

Therefore I feel it is reasonable to reject Denniss’ claims that higher taxes made no impact on QLD coal mining.

Perhaps this is the narrative that sells papers, but an increasing number of people are wondering why if the mainstream narrative was correct, we don’t have the lowest electricity bills in the world.

Below I’ve tried to break this one down into its component parts and add more details.

https://www.theage.com.au/politics/federal/battery-surge-a-cheap-green-saviour-as-war-fuels-price-spikes-20260301-p5o6f0.html

The first problem is in the headline, and I’m sure many will point out the fact that batteries are not green or renewable. Yes batteries are associated with the renewables industry, but that’s the extent of the hyperbole. Gosh even wind and solar, the bedrock of the renewables industry are not themselves renewable products. The term renewable is confined to the fuel source – sun and wind – which is not renewable it’s just the weather. The fuel source for batteries is other generators (insert cannibal reference here if you wish…!).

Second, what are batteries supposed to be the saviour of? The article makes the claim that batteries are responsible for reducing wholesale prices in the recent past and also in the future by displacing gas turbines and minimising the effect of price shocks caused by the Iran war.

Batteries powered by renewables are pushing gas plants off the electricity grid, proving that green energy will reduce fuel bills driven higher by shocks to the global fossil fuel market such as the crisis being driven by the Iran war.

This is a bold prediction of the future, but AEMO’s gas data hub shows that domestic gas prices are so far unaffected by the Iran situation. Looking further back the domestic gas price has averaged around $12/GJ since 2024. The article subsequently references Q4 2024 and Q4 2025, but there were no fuel price shocks in Q4 2024 or Q4 2025 and gas prices have been stable and even reducing in that time.

Source: https://www.aemo.com.au/energy-systems/gas/gas-supply-hub-gsh/data-gsh/data-dashboard

Those fine-tuned to identifying misinformation may also be triggered by the line batteries powered by renewables. South Australia is regarded by advocates as a renewable utopia and should be a good reference to check if batteries are actually powered by renewables.

This chart shows the SA grid generation mix on 5-Apr-2026 (excluding rooftop solar). The teal colour below the line is combined battery charging and the cyan colour is battery discharging.

It is not difficult to see that even when batteries charge in the middle of the day the grid supply is not always all renewable. On this day in particular there were significant imports from VIC – mostly coal – indicating SA’s rooftop solar capacity was not producing much at all. The obvious truth is that grid batteries charge from whatever the grid mix is at the time. Advocates will say batteries are charged from rooftop solar as well, which is true only as far as the percentage of total supply on the grid. Few mention that rooftop solar mostly curtails industrial solar projects.

New South Wales, Queensland and Victoria show similar results for the same period.

Batteries… are pushing gas plants off the electricity grid may be the only defensible argument made in the article, and charts from The Grattan Institute are used to support the claims.

Grattan’s first chart shows the average proportion gas and batteries set the wholesale price at each time of day in the NEM. In the analysis below I have taken the liberty of borrowing Grattan’s fancy layout.

In the evenings of Q4 2024 gas and batteries set the price about an equal proportion of time, but in Q4 2025 batteries set the evening peak prices more often. I got close enough to the same result as Grattan’s chart using AEMO 5min data.

At this stage we can all agree that more batteries coming online in 2025 were competition for other generators, including gas. But Grattan failed to mention other peaking plant like hydro. The same comparison shows hydro output is also down in 2025, not something the emissions reduction cheerleaders make much noise about.

When we plot the average capacity of gas and batteries made available to the market per month we can see the significant increase in batteries.

What about demand? Minor increase in QLD evening demand, minor decrease in NSW daytime demand. Nothing obviously responsible for any significant price deviations, at least not in this time of day perspective.

What about price? There is no Grattan analysis on price except this from Grattan’s deputy energy director Hamish McKenzie:

If you are an electricity generator, and you can choose between dispatching your gas and your batteries, of course you would dispatch your batteries first, because you can do it for free as opposed to paying expensive prices for your gas.

McKenzie’s statement is guaranteed to elicit a tribal response, and it is no surprise that he’s a former policy advisor for Climate 200 backed teal Helen Haines.

Source: https://grattan.edu.au/expert/hamish-mckenzie/

I suppose if you believe battery output is free, it follows that batteries must reduce prices! Below I present the wholesale prices from the reference periods.

We can see that wholesale prices were generally higher in Q4 2024 than Q4 2025. But the lower prices occurred across all timeframes, not just when there was ‘free McKenzie output’ from batteries in the evenings. If batteries are the saviour wouldn’t prices more closely reflect when batteries were operating?

It turns out that Q4 2024 suffered from significant price volatility, and details on these price spikes are captured in excruciating detail in the AER’s high price event reports.

https://www.aer.gov.au/publications/reports/performance/prices-above-5000mwh-october-december-2024

Keeping in mind this is NEM-wide data (averaging softens the spikes), the price spikes occurred mostly in NSW and QLD for short periods in a small number of days. The AER explains that several coincidental changes caused high spot prices – among them coal planned and unplanned outages, transmission constraints, and low wind output – but gas and batteries were barely mentioned.

To dig deeper into the price effects I’ve interrogated the NSW price setters: filter for gas and batteries, sort into price buckets above and below $300/MWh, calculate the proportion of each.

We can see that in Q4 2024, when the NSW spot price settled above $300/MWh, batteries appeared more than gas. This result seems counter-intuitive but remember this is the smaller set of prices over $300/MWh. In Q4 2025 batteries again set more of the high prices in NSW than gas.

Shifting to the prices below $300/MWh we can see a reversal where batteries set the low prices more often than gas in 2025. Similar patterns appear in both SA and QLD where the reversal is occurring in the 2025 sub $300/MWh realm.

Does all this tell us much? Not really, except there’s more to understanding the system than an oversimplified time of day analysis averaged across multiple states.

Even the numbers I’ve presented above hide much of the real information. For example in Q4 2024 QLD had 601 price periods above $300/MWh, but in Q4 2025 had only 40. So when the chart shows batteries set the high prices 22.5%, that’s 22.5% of just 40 price periods, while batteries set the low prices in 10.8% of 26,456 price periods.

One of the main shortcomings of the Grattan analysis is showing data averaged across the entire NEM. This masks differences in each state as we’ll see below.

In the second chart referenced in the article, The Grattan Institute repeats the time of day strategy but on this occasion subtracts 2024 output from 2025 output for both gas and batteries. If 2025 output is greater than 2024 output the result will be positive, and vice versa. The Grattan result shows a dramatic correlation between increased battery output and reduced gas output.

I did the same for each state and the picture changes significantly.

We can see that Grattan’s chart is primarily influenced by Queensland with almost 2,000 MW of grid battery installed. There is some correlation in South Australia (800 MW) as well, but the story is less compelling in Victoria (1,800 MW) and New South Wales (1,100 MW). Tasmania is typically irrelevant in most energy analysis (Sorry TAS…!) and has no grid batteries installed so far.

In conclusion, it’s not cherry picking to take the average results across the National Electricity Market, but it is misleading to claim NEM-wide results when 90% of that result only exists in Queensland in one quarter.

In December 2025 they co-authored a similar piece in The Conversation about batteries in WA and the website version included this disclaimer:

Peter Newman receives funding from the Reliable Affordable Clean Energy CRC.

Ray Wills advises clients within the clean energy sector through his business, Future Smart Strategies. This article did not receive specific financial or in-kind support.

No such disclaimer was provided by RenewEcomedy.

The pair’s thesis covers the well-worn territory that renewables are great and batteries are about to kill off fossil-fuelled generators. Ironically just a few days later Origin announced that Eraring power station would continue to operate into 2029 well beyond the 2025 closure date flagged in 2022. Even the most cynical commentator must now acknowledge that keeping one of the most expensive coal-fired generators in the NEM online appears cheaper than supplying customers with power from new industrial wind and solar.

Before we get into the nitty gritty of the Newman-Wills analysis, it’s worth noting they did not mention retail electricity prices. Regular readers will recall my arguments about the supply chain, and that even if renewables are able to suppress wholesale prices for some periods, the total system cost inevitably increases with subsequent effects on retail bills.

Newman-Wills begin with a chart comparing combined NEM daily average wholesale price against the daily proportion of battery output.

With some minor quibbles about exactly which days are included in the original data I was able to reproduce their chart with reasonable accuracy.

Newman-Wills:

“…market prices frequently exceeded A$200/MWh… due to limited storage capacity and a heavy dependence on gas for peak supply and system firming.”

They claim the correlation shown in their chart proves more battery output reduces wholesale prices. That might convince the least curious among us, but there are several inputs into wholesale prices and comparing one small contributor across all NEM regions provides zero insights into price setters or market conditions.

Direct comparisons with 2024 are misleading as 2024 was an unusually high-cost year that suffered from several significant price spikes. AER reports discuss the primary drivers.

“Prices above $5,000 per MWh continued to have an impact on overall prices, particularly in Q1 and Q2 2024. The causes of the high prices varied between regions, but involved some combination of high demand, network and generator outages, and lower wind and solar output.”

Source: https://www.aer.gov.au/system/files/2024-12/Wholesale%20electrcity%20market%20performance%20report%20-%20December%202024.pdf

The AER’s conclusion is far removed from ‘limited storage and dependence on gas’.

AEMO releases a price setter database each month and with some work it can be shown how often each fuel type sets the price, which region the price setting unit is located, and the fuel type of each.

Recalling that NSW average 2025 prices were lower than 2024 some uncomfortable facts appear in the data:

- coal, hydro and gas all set the price more in 2025

- batteries set the price less in 2025

Clearly there are more to wholesale prices than a simple correlation with one technology averaged across all regions.

My take? There’s a possibility that greater availability of coal combined with greater competition among batteries for the remaining market share suppressed wholesale prices.

It is tempting to point out that in NSW 2025 when industrial wind and solar set the price it averaged below $20/MWh. That’s very low and demands two important caveats – PPA and VWA.

PPA is power purchase agreement which guarantees a fixed price for generator output. There are variations but this generalisation is close enough. It is safe to say there are no industrial wind and solar plants earning below $20/MWh from a PPA.

VWA is volume-weighted average prices which relates the price to the generation volume, providing deeper insights into effects on total price.

Source: https://www.aer.gov.au/industry/registers/charts/quarterly-volume-weighted-average-price-contribution-price-bands-new-south-wales

In the chart above each colour is a different band of wholesale prices and the height shows the contribution of each price to the quarterly volume weighted average price. Add them together vertically and you get that quarterly average.

Barely visible along the bottom in cyan is the collective impact of wholesale prices below $0/MWh – it’s not much. That’s because when the wholesale price is very low, the grid generation output is also very low. Very low $/MWh x very low MWh = a small number and small effect on quarterly average price.

In contrast the price bands above $100/MWh have a much greater impact on the quarterly average price. High prices almost always occur when grid generation is high during peak demand periods. High $/MWh x high MWh = a large number and large effect on quarterly average price.

Quarterly average price is important because most wholesale electricity is sold quarterly.

VWA is simple to calculate with just three columns in a spreadsheet. If you put $/MWh for each time period in column A and the MWh for the same periods in column B, when you multiply A and B and store the result in column C you get $. Once you have that then VWA = sum(column C) / sum(column B). This gives you $/MWh again, but as a volume-weighted average for the data series.

Newman-Wills go on to make the same price vs output correlation for renewables they made for batteries.

I had less luck reproducing this chart. I got a similar pattern but not the same spread, even trying different combinations of what constitutes ‘renewables’. The closest I got was by including rooftop solar, industrial wind and industrial solar.

Newman-Wills draw the same conclusion from this correlation as they did from batteries.

“The data shows a clear correlation: higher battery penetration leads to reduced prices and fewer price spikes.”

But they fail to say why. Their thesis is simply ‘more RE/battery means lower prices’. To verify that claim they should be able to show exactly how ‘more RE’ makes the wholesale market set at a lower price. We’ve already seen the price setter data which shows fewer prices set by batteries and more by coal for lower prices in 2025.

If they cared to pursue their theory further they’d discover that prices are set each 5min by the intersection of the demand curve and the bid stack. Their theory might go on to say that more low-cost generators fills the bottom of the bid stack thus causing the supply curve to intersect the bid stack at a lower price.

The NEM price setting concept is stylised in the graphic below.

It can be seen that for the demand curve to intersect the bid stack at a lower price, there needs to be a lot more capacity offered at lower prices, all the time. The trouble is with renewables is that it is not always available. The sun doesn’t always shine – that’s a real thing.

The pair used another price vs share correlation to claim that gas-fired generation played a lower role in price setting in 2025.

“…gas is being squeezed out of the mix and now plays a much smaller role in price setting.”

This is flat out wrong as shown by the price-setting data presented earlier. In NSW gas set the price 40% more often in 2025 than in 2024. While total gas consumption for power generation is trending down in QLD the picture is more complex in other regions and even trending up in VIC, NSW and SA.

Source: https://www.aer.gov.au/industry/registers/charts/average-daily-gas-used-gas-powered-generation

Newman-Wills continue their analysis with a chart showing longer term trends of renewables and other generators. Surprising nobody, the trends show renewables increasing and other generation reducing.

Their summary is another unsurprising back slap for renewables.

“Since 2024, rapidly increasing battery installations have driven down prices and sidelined gas by enabling renewables to set the market price more often.”

My summary is obviously different.

2025 wholesale prices were generally lower than 2024, but the generation mix that resulted in these lower prices had more coal and gas, not less. Batteries increased in output but set prices fewer times. Any serious analysis about settled prices must acknowledge these facts, not ignore them in order to glaze renewables and receive backslaps from social media cheerleaders.

I think it’s true that more batteries can suppress supply and price volatility, but only for short periods when there’s also enough dispatchable capacity to cover demand. That genuine competition will make the demand curve intersect the bid stack at a lower price point. As soon as a coal unit is not available the battery (or gas or hydro) will set a higher price.

There’s another caveat – charging. A battery’s fuel cost is the wholesale price. Yes that’s usually negative, for now. But more batteries means more demand for MW at negative prices, and inevitably means less of them. If batteries can’t charge cheaply, they can’t sell cheapy either. And once we get there, the batteries will no longer be a price suppressor.

https://reneweconomy.com.au/how-more-wind-and-batteries-push-electricity-prices-down-even-while-gas-prices-stay-high/

At the top of his piece Leitch makes the claim that, “Electricity price rises are less than the price rises in other goods and services…”.

Perhaps he’s right because when I baseline the electricity CPI in Q3 2020, the change in Q3 2025 comes to 117% but the ‘all groups’ CPI comes to 124% and ‘excluding food and energy’ comes to 123%. A bit more detail from the expert would be nice. Source data available from the Australian Bureau of Statistics.

https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/sep-quarter-2025

The next part about the DMO appears correct, but there’s an offhand comment about network unit costs increasing because volumes are down. This implies that more volume would mean lower prices, which is not correct. Networks recover their costs at a rate proportional to the value of their assets, not proportional to the volume of electricity moved through the asset.

It costs a TNSP no more or less to move 1 MWh than 1,000 MWh. In the chart below please note there are no ‘volume’ or any other utilisation metrics used to determine network company regulated revenues.

Source: AER State of the Energy Market 2025

Next Leitch goes on to say, “Generation costs are up largely because of higher gas costs…”. It’s true there’s a correlation between gas price and electricity price, but the NSW quarterly gas price has varied about $3/GJ since Q1 2023, while electricity prices have varied by $107/MWh. The quarterly variation in wholesale electricity prices does not correlate well to quarterly gas prices in the last couple of years.

Source: AER Wholesale Statistics

Even AEMO’s QED Q3 2025 report points out that gas prices are about the same.

Source: https://www.aemo.com.au/-/media/files/major-publications/qed/2025/qed-q3-2025.pdf

Leitch says supply is tighter relative to demand, but supply is up due to new industrial solar and wind projects, while demand is flat except for Queensland where it’s ‘flattish’. Perhaps there’s a particular period where Leitch has identified a supply problem or a demand increase? I’d be interested to know.

Source: AER Wholesale Statistics

The next paragraph Leitch says that gas prices are high but spot electricity prices have fallen FY26 YTD. This shorthand refers to Q3 2025, which apart from the outrageous 2022 and challenged 2024 came in at the highest Q3 on record. Narrative broken.

Source: AER Wholesale Statistics

I’m not going to comment on the Chris Kenny tirade. Electricity is boring enough without going into personal opinions nobody cares about. Also not interested in electricity prices in other countries. Our failing system here is enough for one engineer to mull over!

Leitch eventually goes on to make an obvious point – that consumers with solar and / or batteries don’t pay that much attention to their bill. I would make an exception for those who enjoy the multitude of apps that come with new battery installations – these guys really enjoy their new toys, at least for a while.

However I must congratulate Leitch for being correct here. I’ve made the same point that as consumers opt out of any financial contribution to the electricity system, those who cannot opt out (for cost or technical reasons) are left paying more.

You’d think this escalating situation would be alarming to an economist concerned about social inequity etc.

Now we get to another point that Leitch gets only partly right. Wholesale electricity prices in Q3 2025 are lower than Q3 in 2024. Unfortunately, as I showed in the previous chart, Q3 2025 was the highest ever (excluding 2022 and 2024). No mention of that by Leitch.

With this context (Q3 2025 is highest ever) let’s consider Leitch’s next claim: mean prices have reduced… due to more wind as well as more batteries. His chart references NSW prices, so we’ll use NSW too. Even if you take ‘more wind and more battery output’ at face value, Leitch fails to mention that coal availability was higher, despite overall slightly lower total output.

I went into the 5min data to generate the charts below which represent QLD and NSW combined coal generation availability. The area plot is the sum of 2025 MAXAVAIL minus the sum of 2024 MAXAVAIL for each 5min period - positive means more MAXAVAIL in 2025, negative means more in 2024. NSW had 6% more 5min periods with higher coal availability in 2025 than 2024.

Side note: Alan O’Neil took exception to this when I first posted it on LinkedIn but when I offered to have him on the podcast where he could spend 30min explaining why I’m wrong he ghosted me.

The charts below show the coal, wind and gas. I couldn’t be bothered doing the batteries and the rest!

What I found most interesting when checking the numbers for this writeup is that NSW had 30% more gas-fired generation in 2025 than 2024. That’s a strange occurrence given the claims that batteries are undercutting gas and that gas is responsible for high prices. Doesn’t fit the narrative does it!

The rest of Leitch’s article goes on to say things about price spikes which is a point made abundantly clear by the AER and their chart showing zero price spikes above $5000 in Q3 2025 in every NEM state except SA. Even in NSW which had 30% more gas-fired generation output than the same period last year… Narrative broken?

Source: AER Wholesale Statistics

I hope this article prompted some critical thinking. More of that is necessary to get us out of the hole we are rapidly and determinedly digging for ourselves.

The Baseload Podcast

Brisbane Q 4121

7 December 2025

The Hon Dr Helen Haines MP

Member for Indi

helen.haines.mp@aph.gov.au

Dear Helen

RE energy

I refer to your interview on the RenewEconomy podcast published on 6 December 2025 and your speech opposing the Repeal Net Zero Bill on 24 November 2025.

Link: https://reneweconomy.com.au/energy-insiders-podcast-no-spin-needed-for-renewable-gold-rush/

Link: https://www.helenhaines.org/media/the-coalition-wants-to-dump-net-zero-with-no-positive-vision-for-the-future-just-repeal-rescind-omit/

Congratulations on being so open to discussing Australia’s energy transition and acknowledging the variety of challenges involved. I trust you will consider the criticisms below delivered in good faith and respect the time and effort involved in gaining more than a superficial understanding of the energy systems we rely on.

First an introduction – I am an electrical engineer with over 20years spent in the power and gas industries. I have worked in concept, design, construction and commissioning in all phases of projects, consulting and operating heavy industrial plant across the electricity and gas industries. This education, training and experience gives me a well-rounded and deeply technical understanding of the physical systems that create and deliver our critical energy systems. I have spent the last decade on an autodidactic journey through the economic and regulatory facets of the same systems and am now neck deep in analysing the data.

All this has led me to form the consistent view that existing coal power results in the lowest costs to consumers, new coal results in slightly higher costs than existing coal, nuclear results in higher costs than new coal, and renewables result in the highest overall costs to consumers. I appreciate these statements appear contrary to the popular narrative, but perhaps you might take a moment to reflect on an analogy: compare the qualifications of those in the health industry who push alternative medicines to the education, training and experience of those we rely on for genuine medical treatment. The hosts of the RenewEconomy podcast have at best a kindergarten understanding of our physical energy systems but scoff at any criticism, preferring the opinions within their own bubble.

As you may appreciate through your own career in the health sector, objectivity always trumps ideology. The energy sector is no different. Access to cheap energy is more than an important add-on – our modern society has only evolved to the level it has BECAUSE of access to cheap energy. Imagine the public health concerns and societal chaos if public water treatment systems broke down for more than a couple of days.

You will be aware that medical professionals in Australia are bound by decision-making guidelines including the Australian Medical Association (AMA) Code of Ethics and Good Medical Practice: A Code of Conduct for Doctors in Australia. As a professional engineer I too am bound by a code of ethics.

Link: https://www.engineersaustralia.org.au/publications/code-ethics

I generated this comparison of the ethical standards expected of doctors and engineers.

It comes as no surprise that the code of ethics for doctors and engineers overwhelmingly focuses on positive outcomes for people and society. It is a factual observation that the vast majority of those pushing the narrative that a high renewables system will result in better outcomes for consumers and society are not bound by these codes of ethics and are often vested interests.

To this point I have been attempting to prove myself as an objective commentator. From here I will present facts and data supporting my contrary position and I welcome any questions, challenges and feedback from any quarter. I am more than happy for this letter to be shared with whomever you wish. I will share it with some colleagues.

Before getting into the renewables discussion I must address a statement you made in your Repeal Net Zero Bill opposition speech.

“…vehicle efficiency standards… drive fuel costs down.”

If you were referring to the National Vehicle Efficiency Standards (NVES) you are factually incorrect. The NVES penalises vehicle manufacturers for average fleet emissions above a threshold with no measure of ‘fuel efficiency’ in the legislation at all. Any claim of lower fuel costs as a result of the legislation is derived from assumptions that more vehicles will be electric and less total fuel will be sold. I suggest that claiming the NVES ‘reduces fuel costs’ is a good example of disinformation and I trust that you will check this for yourself and update your future statements accordingly.

The arguments in favour of a high renewables system revolve primarily around reducing the risks of climate change impacts, providing lower costs for consumers and economic benefits from replacing fossil fuel exports with renewables-powered exports. Secondary arguments raise jobs, energy security, and air quality.

I often ask people this question: which part of your bill do renewables make cheaper, and which part do renewables make more expensive? The question aims to frame the discussion around the individual supply chain components of electricity – wholesale, networks, retail and environment. These are the same supply chain components used by the AER, AEMC, AEMO, ACCC, productivity commission (and the rest) to discuss the various cost structures.

So when I ask which part of the bill do renewables make cheaper, the answer must address each component separately.

- Do renewables reduce environmental costs? No, because the subsidies and levies add to costs.

- Do renewables reduce retailer costs? No, because of feed-in-tariffs, smart meters, increased hedging costs.

- Do renewables reduce network costs? No, because we are supposed to build an additional 10,000 km of network.

- Do renewables reduce wholesale costs? Sometimes, but the other times cost more.

If a high renewables system was going to lead to lower consumer costs then one or more of the supply chain costs must be made cheaper. Much cheaper. Even if you make the argument that a high renewable system would have lower wholesale costs, wholesale costs are only 30% of the bill. So if a high renewable system reduced wholesale costs by half, that’s only 15% of the bill. If the other components increased total system cost by a combined total of 15%, we’d be no better off.

This highlights the critical point: the only path for renewables to provide cheaper electricity overall is through lower wholesale prices. Much lower.

Climate

On climate risks, there is no objective analysis that states reducing Australian emissions will make any impact on climate change, especially not the small percentage of global emissions attributed to our remaining coal-fired power stations. A common response to this point is that Australia must do its share of global emissions reduction. I am open to debating that and my simple response is that a proportional response would be achievable compared to the performative political targets we have had since the Abbott government’s emissions reduction pledge of 26 %–28 % below 2005 levels by 2030.

You may wish to argue the point about emissions targets, various country emissions contributions and Australia’s role, and their effect on climate, but I implore you to base your judgement in objectivity.

I believe most Australians would accept emissions reduction policy that could be summarised by ‘proportional response’ and I look forward to hearing any contrary arguments.

Total System Cost

There are many possible paths to enter the renewables cost debate. Some obvious facts are worth noting, these will come as no surprise:

- industrial solar is cheap to build and operate

- industrial onshore wind is not as cheap as solar, but less than coal

- offshore wind is very expensive to build and operate

What’s left unsaid by renewables advocates is that these facts only hold true in isolation. Once the overbuild, firming and transmission costs are included the combined cost is much higher. Intuitively everybody understands this, even the flawed GenCost report after years of critical submissions by engineers like myself, has been forced to acknowledge it.

You may be tempted to argue differently using this chart from the final 2024-25 GenCost report, but then you must also acknowledge that in order to reach this figure the CSIRO excludes the cost of anything built before 2030. Current policy demands 82% renewables by 2030, so clearly including a doubling of today’s 40% renewables system would increase the CSIRO estimate significantly.

While discussing GenCost it must be noted the CSIRO does not apply equitable assumptions across the various technologies in the report. In the background they assume overly favourable capacity factors for wind and solar, and overly high costs for coal-fired power stations. Combined with the massive cost exclusions the CSIRO’s conclusions are flawed and cannot be taken at face value.

This has all been detailed in public submissions and documented in Hansard testimony from CSIRO themselves. In short, I am not fibbing or succumbing to exaggeration when I say that the GenCost report is not the authoritative objective source one expects from the CSIRO.

On costs so far we’ve only discussed the upfront cost of building generators, and only the high-level stuff. More publicly available details are available from AEMO and their integrated System Plan (ISP). The first thing to say about the ISP is that its sole purpose is to initiate new transmission projects. AEMO does not build or operate generators and cannot dictate what generators are built, what type, when or where.

This distinction is critical when looking to AEMO’s ISP modelling. Another misconception is that the ISP models the lowest cost system – it does not. The ISP starts with government targets, then assigns a generation mix that is voted ‘most likely’ by a group of stakeholders. This is labelled ‘step change’ from which AEMO devises the ‘optimal development path’ for the cheapest transmission projects. These ‘actionable projects’ are the final outcome of the ISP and the reason for its existence.

The chart below is from AEMO’s Generation and Storage Outlook files and quantifies some of the costs they expect the ‘step change’ to incur. AEMO suffer from the same affliction as CSIRO and exclude a very large proportion of costs, including costs from any local networks, the extra gas pipelines and anything spent by consumers on rooftop solar and batteries.

From this chart we can see that the 2024 ISP expects around $600 billion to be spent on capital for new generation, transmission and fuel costs by 2052. Note the 2024-25 cost is $7 billion.

Using RBA’s target 2.5% inflation rate, that $7 billion per year is $13 billion in 2050. Working backwards however, the $27 billion per year from 2050 is $13 billion today. This quick calculation reveals the facts nobody discusses – the future cost of just the generation, transmission and fuel is almost double today’s cost according to AEMO in their ISP. This cost increase is in context of the cost exclusions mentioned previously.

Note this an objective analysis, not an exaggeration. You may be tempted to say any final impact on consumers will be tempered by higher GDP or population growth. I welcome that discussion and look forward to somebody discussing it in the media or in parliament.

Wholesale prices

Many will have heard the phrase ‘renewables put downward pressure on prices’. This is factual but only in favourable conditions. It is true that daytime prices can be suppressed by rooftop solar and that a very windy day can see wind output lower wholesale prices for short periods. However consider the fact that most industrial wind generators receive a fixed price for their output via their Power Purchase Agreement (PPA) and there is RET certificate revenue as well. Yes the LGC price has fallen recently but the historical effect remains.

Here it is worth turning to the data published in the public domain by the Australian Energy Regulator (AER).

Link: https://www.aer.gov.au/industry/registers/charts/quarterly-volume-weighted-average-spot-prices-regions

I challenge anybody to identify a correlation between more industrial wind and solar generation and reduced wholesale prices. In truth the wholesale price is set by the highest bidder every 5minutes, and this is rarely wind and solar. Even when wind and solar are the price setter, this occurs in the day when other generators are offering market floor prices to remain dispatched.

The low price period in 2020 coincided with the global COVID lockdowns and resulting low gas commodity prices. In 2021 the 5-min settlement rule was implemented with the result of increasing volatility. Then the 2022 Russian invasion of Ukraine spiked global commodity prices contributing to fuel scarcity coinciding with unplanned outages and some flooded coal mines. Note the inability of renewables to constrain prices then, and the upward trend since 2023.

Recently AEMO stated that wholesale prices in Q3 2025 were 27% lower than Q3 2024. That’s true. What’s also true is that Q3 2024 suffered from some unusual network constraints causing significant price spikes that lifted the Q3 average. Taking out Q3 2022 (Ukraine) and Q3 2024 (network issues), Q3 2025 was the highest Q3 on record. Again, a fact not mentioned by anybody.

In November this year I presented at an industry conference in Perth, discussing the structural changes in the wholesale market as more industrial wind and solar have come online. The presentation is attached to this email.

I showed bidding data documenting the increasing bids in high and low prices and the reducing low-priced bids in the $0-100/MWh range.

I also showed the increasing volatility in the settled wholesale prices correlating to increased wind and solar penetration and the change to 5-min settlement.

Wholesale price volatility is increasing, just the data, also observed by others.

A thought experiment brings this message home…

Q: what is the fundamental aim of renewable targets?

A: to remove coal-fired power stations from the grid

We are building industrial wind and solar that bids into the market at prices well below $0/MWh. We are also building batteries, gas and hydro that mostly bids into the market at prices well above $100/MWh. We are deleting the capacity that bids above $0 and below $100.

Intellectually the result must increase the price spread, and the data confirms it. Increased price volatility increases costs for retailers, costs which are passed on to consumers.

Again this is just the data. The same phenomenon has been observed by others including the well-read WattClarity, the ACCC, the Nelson Review, AER, AEMO and others.

Link: https://wattclarity.com.au/articles/2019/08/longer-term-trends-of-low-and-high-dispatch-prices-in-the-nem-across-all-regions/

Can a high renewable system reduce wholesale electricity prices? There is no evidence to support that claim. A recent report by Paul Simshauser, now CEO at a wind turbine company, claims to have shown that a 50% renewable system is cheaper than coal. But this analysis is flawed, relying on flawed GenCost assumptions and ignoring real-life experiments like South Australia, already at 70% renewables and suffering the consequences of high electricity costs. Simshauser called his report ‘counterfactual’ referring to a modelled system with higher costs if it was all coal and gas. In reality the real counterfactual has already been modelled, and that was our electricity system before the renewables targets took hold.

Another reality check: if a high renewables system reduces wholesale prices, it would be apparent in South Australia. But South Australia in Q3 2025 had the highest wholesale prices of all.

Rooftop solar

An objective fact is that installing rooftop solar reduces the electricity bills for that premises. Batteries likewise. Another objective fact is that the vast majority of solar and battery installations have received subsidies.

Yet another objective fact is that the rampant growth of rooftop solar – which can’t be controlled by the market operator – makes the combined capacity the largest generator in the system, subject to the vagaries of clouds and the predictable onset of darkness – the single largest technical risk to the electricity system. This is the minimum demand problem.

Again this is not an exaggeration and I encourage you to engage with other electricity system professionals, particularly inside AEMO and elsewhere. They will confirm my statement.

Separate to the technical risk, the large daytime rooftop solar output is significantly reducing market share for all large-scale generators including coal, wind and solar. You may have heard the of term ‘curtailment’ and this is the inevitable result of overbuilding unnecessary capacity. Because rooftop solar output cannot be restricted every other generator must make room by reducing output. This accommodation results in loss of market share, now the largest economic problem for new and existing generators. Why are developers reluctant to build new wind and solar projects? Because they can’t get finance. Why can’t they get finance? Because the projects face curtailment (and other factors).

I raise these points from the perspective of the generators. Now I’ll turn to the negative commercial impacts of rooftop solar and batteries. First it must be made clear that a retail electricity bill represents the costs of the entire supply chain. From wholesale to networks to retailers, it’s all covered in the bill, and each of those supply chain components has a different cost structure and different cost recovery mechanism.

Consider the overriding reason people invest in rooftop solar and batteries – it’s to avoid paying an electricity bill or at least reduce it to the bare minimum. Ok fine. If you can afford the entry cost then the subsidies will assist you in opting out of an electricity bill.

Now consider the combined effect of LOTS of people opting out. If less people are paying a bill, those remaining must pay for the system that we are told (by AEMO) is going to double in cost.

Some solar / battery owners will say they still pay network costs, but the nuance is that they receive a feed-in-tariff for their exports that offset those costs too. Some solar / battery owners will say their exports offset retailer purchases in the wholesale market, but the feed-in-tariff is worth far more than daytime wholesale electricity – often ironically suppressed to negative values due to oversupply from rooftop solar.

Above I have made two objective points about rooftop solar:

- technical problems with oversupply / minimum demand and intermittency

- economic problems with loss of market share and loss of paying customers

I welcome any contrary arguments to these points.

Renewable superpower / exports

Here I have laid out detailed factual reasons why our current energy policy must increase costs, contrary to the popular narrative. I have offered a balanced commentary on emissions reduction and the impact of renewables on the cost structure of the electricity system. Another of the main arguments raised is the potential for renewables exports, the ‘renewables superpower’ claims, with the side argument around carbon tariffs imposed by our trade partners.

I find the risk to Australia of carbon border tariffs to be minimal. The concept of border tariffs exists mostly in the EU who are not in our top 15 trading partners.

Link: https://www.dfat.gov.au/sites/default/files/australias-goods-services-by-top-15-partners-2023-24.pdf

I rate the likelihood of any country becoming a ‘renewables superpower’ exceedingly unlikely. Take green hydrogen as an example. Firstly, green hydrogen is incredibly expensive to produce, store and transport. Secondly, there is no market. The primary market was intended to be vehicle transport and steel. For hydrogen to make inroads as a fuel, there must be vehicles to consume it. That’s clearly not going to happen. For hydrogen to replace coking coal in steel smelting, every blast furnace would have to be replaced. That’s not going to happen. There may be some applications for hydrogen to be converted into some form of synthetic fuel to replace a oil-based fuel that’s already expensive, but nothing much more than that.

In reality the concepts of renewable superpower and carbon border tariffs are reduced to nothing more than talking points.

Baseload power generation – existing coal

The idea that baseload generation is out of date or old technology is wrong. The term baseload refers to the underlying demand, and baseload generation is the power stations that run continuously.

Before the renewables targets took hold our baseload coal-fired power stations ran a lot. They ramped up in the day to catch air-conditioning and industrial demand, then ramped down at night. State-owned utilities incentivised off-peak electric hot water systems to increase overnight demand to avoid minimum demand problems. Today we subsidise rooftop solar to create the same problems in the day.

Many people misunderstand the low costs of existing coal-fired power, aligning the fuel cost with export coal prices. This is very wrong. During a senate inquiry late 2024 Matt Canavan asked Clare Savage (head of the AER) which coal-fired power stations are exposed to export coal prices. She replied with Eraring and Gladstone. A quick sense check confirms this. No VIC coal-fired power station buys export fuel – VIC doesn’t export coal.

When the coal-fired power stations were built by state governments they were all built adjacent to their own coal mines. Their fuel cost is literally just the cost of operating the mine. Eraring differs because it was privatised before the NSW state government could build its coal mine.

Link: https://www.abc.net.au/news/2013-07-01/nsw-dumps-27dud27-cobbora-mine-contract/4791554

Gladstone in QLD was also somewhat privatised and suffers from a portion of its fuel being exposed to export prices.

So what’s the fuel cost for Yallourn, Loy Yang A and Loy Yang B? Difficult to tell without asking the CEOs of AGL, Energy Australia and Alinta, but AGL’s annual reports contain some very specific information.

It turns out that AGL’s fuel costs, averaged between Loy Yang A and Bayswater in NSW, are only $22/MWh, and their combined total operating and fuel costs for coal are below $40/MWh.

Given this information, and extrapolating to similar power stations in NSW and QLD, then objectively (with some caveats around Eraring and Gladstone) existing coal is the cheapest possible electricity source.

Link: https://www.agl.com.au/content/dam/digital/agl/documents/about-agl/company-docs/250813-2-agl-energy-limited-annual-report-2025.pdf?srsltid=AfmBOoriEVCl-8p6aWZ89VyEHmgFk3N8vkJL-jWrcA4VfMYPBsw1zDpQ

Baseload power generation – new coal

I sincerely believe no private company is going to build a baseload generator ever again in Australia. The market share problem caused by overbuilding rooftop solar eliminates the economic model. The truth is that at sensible wholesale prices around $80/MWh a new coal-fired power station might need 25years to recoup the capital and its running costs.

Since 2010 only two private non-renewable power stations have been built in the NEM. These are Barker Inlet (AGL’s 220 MW gas peaker in SA) and Tallawarra B (Energy Australia’s 320 MW gas peaker in NSW). Other development includes Snowy 2.0 and Hunter Gas Power Station, both peaking power stations owned by the federal government’s Snowy Hydro.

It is correct that existing coal power stations are getting old. It is also true that when being told the power stations are to be closed as soon as possible, the maintenance program gets minimised and these stations become less reliable. So now we are in the position of governments – in my opinion recklessly – claiming coal power has to end imminently, then not being able to close them at all. This results in taxpayers paying to keep these old coal plants online for years longer.

The logical option is refurbishment. I’ve already shown the capital cost that AEMO expects is required to replace coal. Comprehensive refurbishment of existing coal-fired power stations is far cheaper, with the benefit of not requiring any new transmission.

Will taxpayers be on the hook? Yes of course. But taxpayers are already on the hook for massive costs from the Capacity Investment Scheme (CIS) which guarantees revenue to industrial wind and solar projects. The government won’t even release the anticipated costs, but guaranteeing revenue for many GW of industrial wind and solar has to cost far more than a few coal refurbishments. The recent rebuild of QLD’s 420 MW Callide C4 cost $200 million which is a good reference point.

Our total system cost for the electricity system can’t be suddenly reduced, but it can stop being made so expensive. Extending the lifespan of existing cheap coal is objectively the best way to manage electricity costs. The current 3.5 year notice of closure will soon be extended to 5 years. I expect that when Yallourn closes soon – genuinely too old and rundown to last much longer – after years of secret state subsidies, electricity prices will again lift because there are fewer baseload units left to fill the gaps. Filling gaps with gas and hydro is very expensive, especially in VIC who banned new gas development years ago.

After Yallourn, perhaps the most transparent way out of the mess for now is for ageing coal plants to enter a caretaker scheme. We can’t force private companies to run at a loss and we can’t allow them to close the power stations. A taxpayer funded caretaker program might guarantee a fixed return – say 8% similar to networks – in exchange for a maintenance and availability guarantee and an open book on costs.

There are other harder-edged options too, including buying the assets outright.

Conclusion

When I started this letter I didn’t expect it to reach 16 pages, but I guess that’s an indication of how complex the energy sector has become. Coupled with the misinformation we are bombarded with I don’t blame anybody for getting it wrong sometimes. Nobody gets everything right all the time. I hope the information and more importantly – the thought processes – presented here help you to better understand the physical and economic forces at play in our electricity systems.

Some obvious questions help to clarify thinking:

- which part of the bill do renewables make cheaper, or more expensive

- if high renewables means cheaper electricity, what about South Australia

- as more people buy solar and batteries, who pays for the system

I attach for further reading my Perth conference presentation and a Chris Uhlmann piece from The Australian which raises many of the same points. Recall that Uhlmann developed The Real Cost of Net Zero documentary which now has over 1.2 million views on YouTube and he discussed electricity systems with many impartial people around the world. If you look carefully you’ll see my name in the credits!

This brings me to a much neglected final point – net zero. It’s physically impossible. If you doubt that, please revisit the only Australian government net zero roadmap ever published, in 2021 by the Morrison government. It relied on replacing oil, coal and gas with hydrogen. And that only got us part of the way.

https://www.dcceew.gov.au/sites/default/files/documents/australias-long-term-emissions-reduction-plan.pdf

If somebody is convinced that net zero is a valid proposition, then that same person must have an idea of

- what technology

- what cost

I’ll leave you with that.

Yours sincerely

Ben Beattie

The session was billed as an opportunity to learn how our energy bills work.

The format followed the usual plan - introductions followed by Allegra interviewing the guest speaker, and then some time spent addressing questions raised by the zoom attendees. Me being me, I asked a couple of (in my mind) critical questions and was fortunate to have several others ‘upvote’ my main question to the top of the list.

This has become my main question in these things and is intended to prompt those asked to follow a more structured thought process when crafting their response. Unfortunately (understandably??) this question was not taken to the expert, although to be fair a couple of other questions were.

Anybody who has seen me present will be familiar with this image:

For those paying attention to the screenshots the modern technology allowed me to listen to the zoom from my phone on the car radio while larping as a chauffeur for the kids after-school activities. Lucky them!

Technology also allows me to send those screeshots direct to OneDrive (thanks 4G and data centres) where I can send them straight into this substack post.

When I got home and had a few minutes I reflected on the comments made in the zoom and wrote the letter below, emailing it to Allegra’s APH email address a few minutes ago. Yes, everything above is the intro!

Ben Beattie BE (elec) CPEng RPEQ

Brisbane QLD 4121

24 November 2025

Allegra Spender MP

Member for Wentworth

Edgecliff NSW 2027

Dear Allegra

RE Zoom about energy bills with Amandine Denis-Ryan

Thankyou for hosting the zoom session, it is important to hear peoples’ views and have open discussions. There is not enough objective discussion on energy, a particularly challenging topic. It should be noted that Amandine represents IEEFA, an organisation with the stated aim of advancing renewables. They say so on their website.

Most of the information presented was pretty close to correct but some key points were not mentioned. For example it is true that domestic gas price has become very closely correlated to wholesale electricity price since the Queensland LNG exports commenced. But it’s also true that Victoria banned new gas developments as their gas supply was depleting.

Several contradictions about coal made their way into the conversation. One example is the lack of reliability from coal plants can cause price spikes. It is also true that wind and solar cannot prevent price spikes. Further the inherent variability of wind and solar generators has fundamentally altered the structure of the wholesale market to make it far more volatile – in both supply and price – than it used to be. The obvious counter point is that more reliable coal means less volatility and lower prices.

A point was made about gas royalties and the PRRT, but the PRRT only applies to offshore projects in commonwealth waters, which is nothing to do with the east coast electricity market. Higher gas royalties would make electricity derived from gas more expensive – recall the correlation…

The claim that industrial wind and solar reduces wholesale electricity prices is true at some points in time but wind and solar projects primarily sell their output on fixed price contracts outside the wholesale market. Even if the wholesale price is reduced at some times, retailers still pay the contract price which is passed onto consumers.

Another point was made about negative wholesale prices being good for consumers. Negative prices are still a cost for participants in the wholesale market and these costs are still passed onto consumers.

I appreciate that energy is a complex topic and there are many variables. I’m sure you’ll agree it is in everyone’s best interests for our politicians to be as objective as possible in all matters.

Yours sincerely

Ben Beattie

When I

Recently I posed the blindingly obvious questions about net zero policy - what technology, what cost - to the geniuses over on LinkedIn. Not because I expected a glazing session but because I think it’s important to have a sane presence in the ‘market place of ideas’. Readers may be surprised to learn that from my observations the tide is turning. Whether it’s enough politically to prevent economic disaster is another question.

When poking the tribe with a stick by challenging the very idea of net zero I referred to the only net zero plan published by an Australian government (Morrison 2021) which proposed replacing coal, gas and oil with hydrogen derived from electrolysis powered by wind and solar.

https://www.dcceew.gov.au/sites/default/files/documents/australias-long-term-emissions-reduction-plan.pdf

Even that lofty ambition only got us halfway there. Everybody - even those in favour of attempting net zero - now knows there is no possibility that hydrogen can replace fossil fuels.

There is no pathway to net zero. Attempting it will destabilise our economy and send us towards the third world. Not immediately, not while we still have wealth to convert into debt and low productivity. But inevitably the end point of net zero is no industry, no jobs, no wealth.

https://ourworldindata.org/co2-emissions

The utter futility of the whole exercise - globally - is obvious.

‘Oh they’re doing it over there’. No, they’re not. No country is attempting what Australia is supposed to be doing.

Any country with ‘low emissions’ already is powered primarily by hydro and nuclear, has a small population, small geography, and imports basically everything. Australia is a fossil fuelled powerhouse with a relatively small population, large geography, and the ability to make and grow everything.

Australia exports energy security to its neighbours. We should be proud, but net zero means turning that off too. Every other country that makes stuff and uses fossil fuels to do it is doing so freely with no regard for pretend accords like Paris. They are getting wealthy in the process.

Meanwhile we are going backwards.

What environmental result does this sacrifice achieve? Nothing good. China loves it though, so do all the countries quietly taking up Australia’s position in the global supply chains for food, fibre and energy.

https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release

If renewables can’t keep aluminium running here, how can renewables run new generation data centres? There is no ‘renewable superpower’ scenario. That’s a level of disinformation spearheaded by long-term vested interests like Ross Garnaut.

Unless we change course Australia will become a backwater of the world, a poor and indebted shallow version of its former self.

We need to impose a 30yr hiatus on all emissions reduction policies. Turn them off and remove the handbrakes on our large and small businesses. Redirecting bureaucracies to set goals on energy security and self-sufficiency, ignoring emissions reduction and focusing on efficiency and total economic benefit is the only way forwards. A level of maturity is required to accept past mistakes and move forwards.

We need time to let the solar panels and batteries reach end of life and be sent to landfill. Time to let the industrial wind and solar projects to reach end of life and be decommissioned - more landfill.

Along the way we need to get some nuclear power plans moving and extend the life of existing coal fired power stations. Put the privatised assets on a caretaker program like the transmission system - guaranteed 8% return in return for open books on costs and guaranteed availability.

We need to develop more gas in VIC and QLD and NSW, and remove the emissions reduction distortion from the electricity market rules.

Cancelling the ISP transmission projects, lowering the market price cap and reversing the 5min settlement is essential to limiting electricity system price rises.

Plenty more to be done too.

Before we get to the detail, you might notice that two of the five panel members have double-barrel hyphenated names. I took time to look into how many left-aligned politicians have more than one capital letter in their surnames. If you know of more please let me know. This is a phenomenon we should investigate in more depth! (I took some liberties in the name of levity)

That the inquiry was a witch-hunt is obvious from the tone and content of the questions directed at witnesses.

If you are challenging the necessity for the steamrolling of nature and landholder rights, if you question why Australian governments are favouring the interests of foreign developers and the climate lobby over local farmer objections, and if you just don’t sit inside the thick-walled green bubble that surrounds green interests in Canberra, you are considered guilty of being a climate denier, a right-wing nutjob and a Murdoch media sycophant.

If on the other hand you strive to be included in the green bubble the chair gives you uninterrupted airtime to promote your own special brand of misinformation then invites you to lunch.

At first glance the Terms of Reference for the inquiry seem fair and balanced, listing concerns over astro-turfing, influence of local and foreign interests, think tanks and media. Now consider this inquiry was proposed by the Greens and the agenda becomes more sinister.

In our bush regions the communities that oppose industrial wind, solar and transmission lines don’t yell at each other from their kitchen windows. They often live kilometres apart. Renewables and transmission developers can pick them off individually. As Grant Piper organiser of the National Rational Energy Network told the hearing:

“…what happens with us is that we’ve had compulsory acquisition for powerlines, and we’re facing 138 turbines three kays from our house and 185 eight kays north of our house. Mary is in a similar situation.

The wind and solar prospectors come into an area on the quiet and sign up a few anchor hosts, and they sign up on options with non-disclosure agreements. Your neighbour, if he signs up, is not allowed to discuss it with you.

So you’ve got your neighbour signed up for a project—it might be years—and he is not allowed to tell you about it, and you don’t know anything about it. Then, when they’ve got enough ducks in a row, they hold a community consultation meeting. You go along and find out.

They sell it as a done deal: ‘We’ve signed up these people; it’s going ahead. It’s a done deal.’ That’s the start of the consultation period that you talked about earlier in the day, but that’s not where it starts. From the moment they’ve signed up a host, the division in the community is baked in because, if we defeat the project, the hosts are annoyed and, if it goes ahead, the rest of the community is ignored.”

Source: Hansard transcript, 12 November 2025

As a result many have joined Facebook groups to stay informed and share information from developers when it becomes available.

If you are reading this and feel I might be exaggerating the tone and feel of the proceedings, I invite you to watch it for yourself. Get in touch if you disagree.

Ananda-Rajah’s questions were almost exclusively aimed at undermining farmers and landowners, while supporting big developers and the climate lobby. The senator was very interested in any links to Advance, the lobby group that successfully disrupted the government’s Voice propaganda and is now targeting net zero. Ananda-Rajah also downplayed any concerns from farmers about intimidatory tactics and brushed off testimony that described the negative impacts of wind turbines e.g. noise.

Ananda-Rajah was less interested in hearing that farmers may prefer nuclear power to the industrial wind and solar rollout favoured by the senator.

The Greens chair Whish-Wilson was very comfortable pushing his own misinformation including the claim that the fossil fuel industry receives $20 billion in subsidies, and several times offering his opinions on links to Murdoch media e.g. sky after dark.

Will Shackel was a highlight with his usual balanced and mature outlook, pointing out that several of the witnesses including the Australian Conservation Foundation and the Labor party itself had engaged in misinformation against him personally. Don’t bother looking for a follow-up in those interviews. The ACF was well glazed by the chair and Ananda-Raja during their session, with no adverse questions coming about their treatment of Will on social media. Ananda-Rajah was unable to display any embarrassment as Will discussed his submission detailing millions of dollars spending by the Labor party on pre-election social media disinformation, in particular the Smart Energy Council’s idiotic $600 billion nuclear claims.

RenewEcomedy and Crikey were also called out by Will for attempts to contact his family at their workplaces and various online personal attacks.

Perhaps not surprising then that Whish-Wilson was interviewed by Anne Delaney, wife of Giles Parkinson, in the weeks leading up to the hearings. This interview is well-worth a listen in hindsight as the greens senator provided insights into his personal bias and complacent outlook on the misinformation regularly pushed by the climate and renewables lobby. No self-reflection indulged.

There were several entertaining sessions, particularly with the Institute of Public Affairs where Daniel Wild treated the green panel members with deserved disrespect. At one point Executive Director Scott Hargreaves had to educate Whish-Wilson on the meaning of non-replicable when discussing the well-known and well-documented reproducibility crisis in health and science.

Perhaps the most egregious session was the treatment of environmentalist Steve Nowakowski, who has spent the last few years documenting and making public the location and quantity of wind and solar projects that are proposed to be built across the country. His Renewables Truth Map is a major thorn in the side of the government and they are desperately trying to debunk and discredit Nowakowski.

Not long into the hearing Ananda-Rajah asked Nowakowski about a Courier-Mail article released that same morning criticising a submission made on a renewables project back in March 2025. Did Ananda-Rajah have prior knowledge of the article? Who knows, but Ananda-Rajah’s intervention was not really about misinformation, it was a gotcha moment designed to produce headlines. In that she succeeded, with RenewEcomedy and others faithfully reproducing the lines.

A lesson there for all those intending to challenge the renewables industry – they are well funded and well connected, a stark difference to the underdog in this fight.

When I first heard about this inquiry I took a moment to look up the chair, Green senator Peter Whish-Wilson, who took Bob Brown’s senate spot in 2012. Whish-Wilson’s maiden speech is well intentioned and well written like most maiden speeches although I couldn’t help but extract this sections and reflect on the irony:

“Respecting those with a deep commitment to the natural environment will be critical to understanding and solving many of today’s environmental conflicts.”

“I was shocked at how rational, sensible people seeking answers were soon treated with contempt, were publicly attacked and ultimately were officially ignored when the Lennon Labor government abandoned due process, ditching the independent umpire to fast-track the pulp mill proposal through parliament in 2006 by special legislation for Gunns.” Peter Whish-Wilson 27 June 2012

To find the video footage of the senate hearings go to the link below and:

1. Enter 28 November 2025 in the start date selector

2. Enter ‘climate’ in the test field

https://www.aph.gov.au/News_and_Events/Watch_Read_Listen/ParlView

Fig 1: EECON2025 presenters

This year’s event was held in Perth and our presentation used historical NEM price and supply data to make the case that generator bidding into the wholesale market has altered dramatically as more industrial wind and solar have come online. The changes are primarily observable in the coal-fired fleet.

At the conclusion of my talk there was limited applause, but several people congratulated me afterwards. Perhaps indicating at least a portion of the electrical engineering ecosphere has doubts about the direction energy policy is taking us.

Fig 2: bids in price bands, per fuel type, NSW 2010 and 2024 (data: NEMWEB)

In the presentation we showed in the simplest possible terms that less capacity is being offered into the wholesale market in the $0-100 /MWh range. As I stated on the day, if a product is not offered for sale at a reasonable price, how can it be sold at a reasonable price?

We are not saying that intermittent supplies are the sole reason for increasing retail electricity prices. The most skeptical among us will say that industrial wind and solar are either responsible for the price rises or can’t reduce them. Iberdrola CEO Paul Simshauser says otherwise.

Simshauser argues in his recent ‘counterfactual’ report that prices would be higher without renewables. But like any model the inputs determine the outcomes. I believe Simshauser made three critical errors in his model, and as I wrote on LinkedIn at the time:

1. They exhume CSIRO’s flawed GenCost assumptions on coal costs - high fuel prices and ultra-supercritical technology new builds

2. They take $/MWh from 2005 with sunk cost and cheap fuel, inflate that using CPI, and compare that cost against their GenCost-style new costs in 2025

3. They limit the market share for coal by imposing an arbitrary 50% renewables minimum threshold

Looking at the actual data – not a model with favourably selected inputs – we see a large increase in the spread of wholesale prices, an indicator of increasing price volatility.

To quantify the price spread we used standard deviation which measures variance from the mean. We showed that standard deviation for each hour averaged per year at around $10-20 /MWh, has increased to $50 /MWh since 2021. This increased price volatility coincides with the increasing penetration of renewables and pre-dates the 2022 Russian invasion of Ukraine. The increase in volatility also coincides with the introduction of five-minute settlement, a change from the previous arrangement that averaged 5min prices over 30min, and has since remained a dominant feature of the wholesale market.

Fig 3: settled wholesale price, market price caps and volatility in NSW

Five minute settlement was first proposed to the AEMC in 2015 and was eventually approved in 2017. When introduced on 1 October 2021 it was supposed to reduce prices by reducing volatility:

Five minute settlement provides a better price signal for investment in fast response technologies, such as batteries, new generation gas peaker plants and demand response. These fast responders are needed to support the increasing penetration of variable generation in the market. “With more wind and solar generation entering the market, along with the retirement of thermal generators, there is an important role for fast response generation and services to plug the gaps when the wind isn’t blowing and the sun isn’t shining,” said AEMC Chairman John Pierce.

Moving to five minute settlement will align the physical electricity system – which matches demand and supply of electricity every five minutes – with the price signal provided by the market for that five minute period. “Price signals that align with physical operations lead to more efficient bidding, operational decisions and investment,” said Mr Pierce.

“Over time, this flows through to lower wholesale costs, which should lead to lower electricity prices than in a market with 30 minute settlement. Wholesale costs make up around one third of a typical electricity bill.”

Fig 4: AEMC rule determination

It seems clear that a ‘better price signal for investment’ must come at a cost for consumers. This ‘better price signal’ has been entirely realised with a significant increase in wholesale price volatility. The AEMC discussed volatility at length in the decision-making process.

Five minute settlement will better align generator’s bidding strategies with the efficient outcome of the market. Reduced incentives to induce high prices and volatility is likely to lead to reduced hedging costs for retailers and will lead to reduced costs for consumers.

…five minute settlement would provide an improved incentive for flexible resources, leading to lower prices and less spot price volatility over time.

The Commission considers that the historic volatility observed in five minute dispatch prices under 30 minute settlement is unlikely to continue in the presence of five minute settlement. Price spikes under five minute settlement are more likely to be a result of changes in supply and demand and reflective of the physical conditions of the power system and the network.

Source: AEMC five minute settlement final determination

The stark difference between the AEMC’s desired outcome and the reality shown by the data should bring these organisations to pause. Instead of reducing the opportunity for price volatility they have perversely developed the perfect mechanism to create it.

How could they get it so wrong?

Fig 5: NSW price setters by fuel type, 2010 and 2024

Other market events have also shaped wholesale prices. In the price data we can observe the effects of regular summer heatwaves, carbon tax, LNG exports from Queensland, power station closures, COVID lockdowns with associated lower demand, and most recently the Russian invasion of Ukraine that coincided with fuel and generator scarcity in the NEM and the associated ‘energy crisis’.

Fig 6: NSW wholesale price evolution and key market events, 2010 to 2024

No electricity system is immune from external influences but Australia’s isolation and self-sufficiency should serve as an almost insurmountable buffer between us and any price shocks caused elsewhere in the world. The forced introduction of large amounts of industrial wind and solar (I say forced because of the subsidies and targets) has not provided any insulation at all from other questionable decisions. This intermittency exaggerates every negative impact making our critical electricity system more fragile and more susceptible to upset than it should be.

Returning to a baseload-dominated generation system and addressing bad decisions like the five-minute settlement must reduce this fragility. The evidence exists in the data. Before five-minute settlement, before closure of coal power stations, before high penetrations of industrial wind and solar, we had far more stable and predictable wholesale power prices.

Let’s go back to the future.

02:34 electricity system problems part 1 – disappearing middle

07:24 electricity system problems part 2 – missing money

09:07 Danny Price vs the rest

16:04 The GOAT vs Chris Bowen, 7:30 report 18 Sep 2-25

36:57 Interview – Mark Ostwald interviews Ben Beattie

86:58 End

Chris Bowen, ABC 730

https://www.abc.net.au/news/2025-09-18/government-vows-to-cut-emissions-by-62-to-70-per/105791392

Danny Price on ABC radio

https://www.abc.net.au/listen/programs/brisbane-mornings/mornings/105717128

Here’s a youtube clip of Chris Bowen’s first question as treasurer in 2012

Chris Bowen’s recent media releases

https://minister.dcceew.gov.au/bowen/media-releases

Chris Bowen October 12, 2022 730 report

Mark Ostwald

https://www.linkedin.com/in/mark-ostwald-19097441/?originalSubdomain=au

DO AS THEY DO is the demand, implying Australia will see the same golden yield if only we tax our own resources in the same manner as Norway.

At first glance the argument is compelling. Norway’s 2024 petroleum tax haul was over AUD 114 billion, far more than Australia’s AUD 22 billion.

Source: https://www.norskpetroleum.no/en/economy/governments-revenues/

Here we’ll explore objectively why the Norwegian government collects more petroleum tax revenue than Australia. The key topics include:

- Revenue

- Costs

- Markets

- Ownership

- Taxation

Revenue

Norway’s total 2024 oil and gas exports were worth AUD 171 billion almost double Australia’s AUD 90 billion. On raw numbers Norway’s 66% return (114 / 171 = 0.66) compares favourably to Australia’s 24% (22 / 90 = 0.24), but Norway’s sovereign wealth fund is built using revenues from both gas AND oil. Climate change activists critical of Australia’s royalty schemes tend to ignore this fundamental point in their public envy campaigns.

Side note: it surprised me to find Australia exports 250,000 barrels of oil per day largely from the conventional gas developments offshore WA

Activists aim their ‘more taxes’ campaigns at our LNG export industry, so an objective comparison demands separating Norway’s gas exports from their oil exports.

Norway applies the same taxation scheme to oil and gas but their data doesn’t provide separate tax revenue figures for oil and gas.

Here I have inferred Norway’s individual oil and gas revenues by first taking their individual export value as a percent of total petroleum exports, then multiplying that percentage by total petroleum tax revenue to get the tax revenue for each. The results indicate that since 1971 (the start of the data series) 60% of Norway’s petroleum tax revenue is from oil and 40% from gas. The data also shows that 40% of tax revenue from gas has been generated since 2020.

In an ironic twist we find that the total tax revenue from just the gas component is 24% of the total (856 / 3584 = 0.24) including the out of proportion 2022 returns generated by external events. This 24% is similar to the tax recovered from Australian LNG.

Source: https://www.norskpetroleum.no/en/economy/governments-revenues/

The next phase in comparing apples to bicycles is understanding the volume of gas exported by each country i.e. a greater volume of gas offers greater opportunity for tax returns. We can see that total sales volume of gas leans 60:40 in Norway’s favour.

For this reason even with an equivalent sales price Norway would receive nearly 50% more revenue than Australia purely because it produces and sells more gas. Readers may recall headlines saying that Australia is one of the largest gas exporters in the world, but the detail matters. Australia is one of the world’s largest LNG exporters while Norway exports 95% of its gas by pipeline to close European neighbours, with no need for expensive LNG conversion, ports and shipping.

Source: Wikipedia

Summary: Norway’s sovereign wealth fund is mostly derived from oil and Norway sells more gas than Australia, therefore gets more revenue

Costs

Norway exports 95% of its gas through pipelines as raw natural gas, but Australia exports all of its gas by ship after first being phase-shifted to liquid at -161 °C. It can be shown that the cost of converting natural gas to LNG in an Australian onshore facility is around AUD 5/GJ.

We can convert Australia’s 2024 LNG export total into 4,212,804,969 GJ and infer that on top of any costs for production and shipping, converting that gas to LNG could cost up to AUD 20 billion per year. By contrast Norway’s federal budget shows total expenditure on petroleum activities (including oil and gas) to be around AUD 5 billion per year.

Pipelines are cheaper than LNG plants, ships and ports giving Norway a much lower cost structure than Australia. With lower overall costs there is more left after taxes.

While we are discussing costs it should be pointed out that 30% of Australia’s LNG exports originate from unconventional coal seam gas in Queensland, at AUD 5/GJ to produce and another AUD 5/GJ to liquify. Norway’s oil and gas production is conventional and sourced from oil rigs in the North Sea all very close to markets.

Source: https://www.eia.gov/international/analysis/country/nor

Summary: Norway has a low cost structure allowing significant profits even with higher taxation

Markets

Norway sells its piped natural gas into the EU market while Australia primarily sells its shipped LNG into Asian markets. Higher Asian prices generally favoured Australian LNG producers until 2022. Future gas market prices are expected to converge as global LNG supplies increase.

Source: https://fred.stlouisfed.org/series/PNGASJPUSDM#

Summary: Asian LNG prices historically favoured Australian LNG slightly

Ownership

I am not aware of any state-owned LNG terminals, pipelines, ships or gas production facilities in Australia. Even though there have been subsidies / grants / tax incentives involved in developing the Australian export LNG industry e.g. the original pipelines for the North-West Shelf development were subsidised, private sector investment in the Australian gas sector dwarfs any public contribution.

This market-based scheme sits in stark contrast to Norway’s model of direct public investment and ownership:

The State’s Direct Financial Interest (SDFI) is a system under which the Norwegian state owns holdings in a number of oil and gas fields, pipelines and onshore facilities... At the end of 2024 the SDFI portfolio consisted of financial interests in 183 production licences, 44 producing fields and holdings in 16 joint ventures that own pipelines and onshore facilities.

The Norwegian government also owns a 67% share of Equinor, a AUD 100 billion dollar oil and gas company. Data shows that state investments have contributed at least 40% of all the wealth fund returns compared with taxation. It is safe to say that state ownership will not be a feature of the Australian gas sector in the foreseeable future.

Summary: Norway derives a large amount of its oil & gas revenue income from state ownership

Taxes and royalties

Norway helpfully spells out its petroleum tax and royalty arrangements. State revenue is collected from a combination of regular taxes, special taxes, and income derived from their state-owned assets. It can be seen that the major components of Norway’s revenue from gas fall into three categories – ordinary taxes, special taxes and SDFI.

As noted previously the SDFI component is the Norwegian government’s direct ownership share of oil and gas projects and infrastructure and it receives a corresponding share of the income from these assets. Since a government can’t tax itself, this ‘share of income’ is effectively untaxed and has contributed 45% of all oil & gas revenue since the turn of the century.

A reasonable comparison to the Australian LNG industry must therefore remove all the revenue components that originate in state-ownership and focus exclusively on the royalty and taxation arrangements.

Ordinary Norwegian company taxes are collected at 22% after which the petroleum sector gets hit with a ‘special tax rate’ that takes the effective tax rate to 78%. Australian company tax is 30% and combined with our own special tax – Petroleum Resource Rent Tax (PRRT) – makes an effective tax rate of 58%.

Australia’s PRRT only applies to offshore projects in Commonwealth waters. This means the PRRT does not apply to the Queensland LNG projects, which source their gas onshore from coal seam gas fields. If this is the first time you have heard this, consider the level of propaganda directed into anti-gas campaigns and be warned. To read more about it try the 2017 PRRT Review.

These onshore LNG projects are subject to a separate royalty scheme administered by the Queensland state government that collects LNG royalties at around AUD 37 per tonne (until the LNG price exceeds $23/GJ). It’s important to note that this is just the state royalty component payable to the state government, separate to the company tax collected by the federal government.

What would the Norwegian tax scheme look like applied to these QLD LNG projects?

In 2024 QLD exported 23 Mt of LNG for an average sale price of AUD 15/GJ. On a cost base of AUD 10/GJ, that 23 Mt @ $15/GJ would generate AUD 17.9 billion revenue leaving AUD 5.9 billion after costs.

If the Australian PRRT was applied then in 2024 the state might have collected AUD 3.5 billion in tax leaving AUD 2.5 billion profit.

If Norway’s tax scheme was directly superimposed on the Queensland LNG projects the tax collected might be AUD 4.7 billion, leaving AUD 1.9 billion profit.

That’s a lot of words and charts to state the obvious – Norway taxes its resources higher than we do here in Australia. But turn your attention to the impact of costs. With lower costs there is more remaining to be split between tax and profit. Both tax and profit are greater when the costs are lower.

Note: this is clearly the most basic example possible. Real life is more complicated.

Summary: Australian states tax differently to the commonwealth, while Norway’s lower cost structure allows higher taxes and higher profits

Conclusion

Norway’s sovereign wealth fund came mostly from oil, and a huge component of the wealth is derived from state ownership of infrastructure and petroleum development companies. Taxation is a smaller part of the total revenue and is primarily a special tax tax rate on profits.

By comparison Australian taxpayers own no oil & gas infrastructure or projects and the Australian special tax on oil & gas profits (PRRT) applies to offshore projects only. Onshore projects are taxed according to state rules.

In addition to selling more gas Norway has a lower cost structure and sells natural gas by pipeline into European markets while Australia sells LNG into Asian markets.

Norway’s higher tax rate works because of the much lower cost structure and ease of resource development.

Can Australian oil & gas resources deliver a sovereign wealth fund comparable to Norway? The short answer is no. You can’t tax a resource you don’t have or receive income from assets you don’t own.

Summary:

- Norway’s lower cost structure allows higher taxes AND higher profits

- Norway’s sovereign wealth fund is mostly derived from oil, not gas

- Norway sells more gas than Australia, therefore gets more revenue

- Norway derives a large amount of its oil & gas revenue income from state ownership

- Asian LNG prices historically favoured Australian LNG slightly

Note: I used 6.53 as the conversion rate between NOK and AUD

https://www.treasury.qld.gov.au/policies-and-programs/energy/energy-roadmap/

Touted as a decision-making framework to see the state’s energy infrastructure through 2030, the roadmap departs in many ways from Labor’s plan first tabled under Premier Annastacia Palaszczuk in June 2022. Readers should note the plan only discusses electricity and is silent on any development of gas, coal and nuclear resources. Another roadmap may will deal with those in the future.

Perhaps the most surprising feature of Janetzki’s plan is a claim the decisions made within will save households $1,035 each per year after 2035. Considering the LNP’s small target approach to the 2024 election this commitment is akin to genuine bravery. Alas, on inspection the $1,035 claim is merely the difference between the $86 billion cost of the Palaszczuk plan and the $60 billion expected cost for the Queensland component of AEMO’s Integrated System Plan.

This is not a detailed policy document, so while it lists a few specific spending measures the total cost outcomes are less clear, and the future of coal power is presented in a variety of modelled scenarios called ‘pathways’. It is a roadmap after all.

The primary gripe latched onto by climate alarmists and the renewable lobby is that state-owned coal fired generators will run to at least the end of their technical life supported by a $1.6 billion maintenance guarantee, instead of all being closed by 2035. This was previously signalled in a June 2025 ministerial direction from Janetzki telling the energy bureaucracies to remove QLD renewable energy targets from their planning methodology.

https://www.aemc.gov.au/sites/default/files/2025-06/Ministerial%20directions%208%20June%202025.pdf

Sidenote: the renewable and climate lobby is surprisingly well organised and largley funded by overseas interests. That detail was assembled by the Page Research Centre in their submission into the Submission to the Senate Select Committee on Information Integrity on Climate Change and Energy.

https://www.aph.gov.au/DocumentStore.ashx?id=247f7317-e32b-47af-9919-665f971165ff&subId=778574

Most people realise it is a sensible decision to utilise existing sunk cost assets for as long as possible, although this appeared to surprise the pro-renewables AFR:

Take a second to appreciate the mental gymnastics required for a major newspaper to appear surprised that a government decides to fully utilise its power generating assets and not shut them down early because of ‘targets’.

More sanity can be found with CopperString, the 1,000 km transmission line project intended to connect Mt Isa to the national grid at Townsville having its design voltage downgraded from 500 kV to 330 kV with significant cost savings. After winning the 2024 election the LNP government cancelled the Pioneer Burdekin pumped hydro but delayed cancelling the other huge Borumba pumped hydro project. The roadmap is non-committal about Borumba but does list several smaller hydro projects either being purchased outright or to begin feasibility studies.

An expansion of the gas turbine fleet will see at least two new plants built by 2030 with potential for more along with a suite of network and grid batteries. The decision to further pursue gas turbines and batteries is somewhat unavoidable given the huge capacity of rooftop solar in the system. The pro-renewable lobby will claim success, but the reality is that when the grid needs all the coal to meet maximum demand, but the coal even at its lowest output is too much for minimum demand, then coal has to close down for at least some of the year.

Bayswater power station in NSW is trying this strategy now by putting units in hot standby during the day. The details of that can be read here in more detail on the WattClarity blog.

https://wattclarity.com.au/articles/2025/10/11oct-bw02-twoshifting/

The reality is that the minimum demand problem will force the closure of coal-fired power stations before economics or end of life. The physics of the grid must be respected after all and so addressing minimum demand becomes more difficult and expensive than meeting maximum demand.

As a result the additional cost of batteries and pumped hydro serve two purposes:

a) adding additional load into the grid so that coal can remain available to help meet peak demand; and

b) the potential to help with peak demand.

Even so the risk of blackouts increases as reserve margins shrink and grid stability relies on ever more specialised, distributed and coordinated devices. The 10-15yr lifespan of batteries means their positive impact is short-lived with their small capacity diminishing over time until they become expensive land fill.

Overall this strategy might be the least-worst option for Queensland electricity consumers. It guarantees the existing coal fleet remains well maintained, inserts new peak capacity and some additional demand. However the ongoing increase in capacity of industrial wind and solar and rooftop solar will continue to reduce minimum demand and erode economics for all generators.

Janetzki’s roadmap is a start towards a more sensible future electricity system, but still kicks the can down the road delaying real intervention in the subsidy schemes that are the root cause of the problems, and unless arrested will ultimately result in the need to subsidise everything.

For context, NSW is Australia’s most populous state with the highest electricity demand peaking around 14 GW in summer. QLD is next peaking around 11 GW.

The daily VWAP for each region helps to identify significant events, such as carbon tax, very hot days, the introduction of upstream LNG demand in QLD, COVID lockdown price suppression, 2022 crisis and the general increase in price volatility with the growth of renewables.

The strong orange and blue lines are a simple Excel moving average of the underlying noisy data, itself the maximum and minimum combined daily MW output of coal-fired power stations in each region. Yellow is the difference.

I’m strongly of the opinion that the minimum demand problem will prematurely close many coal units before pressure from cost or age. We now see minimum coal breaching 2,500 MW in QLD and 1,500 in NSW. With the minimum turndown of a coal unit around 40% MCR, the result is inevitable. QLD has over 8,000 MW of coal units, and 40% is around 3,000 MW.

In the QLD data presented here there are 34 days when the daily minimum coal output breached 3,000 MW, and 30 of those occurred in 2024/25.

Note this is a technical problem, because the physics always trumps the economics. Solutions include building more flexible generation i.e. gas. Some will say batteries, and there’s definitely a business model for batteries at least for the time being.

Solutions also include more load. Batteries are ‘sometimes’ load just as they are ‘sometimes’ supply. Datacenters seem unlikely to me because of the power cost and small population in Australia. Hydrogen electrolysers - nope.

Aluminium? Also unlikely, refer to costs for everything.

But Australia does have a lot of gas. Maybe one day we’ll have the will to use it…

Below - AEMO has some pretty outrageous assumptions!

AEMO generation information