Australia to experience unsustainable energy price drop: report

CANBERRA, Dec. 18 (Xinhua) -- Power prices in Australia will begin a two-year slide in mid-2018, according to a report released on Monday.

The assessment, released by the Australian Energy Market Commission (AEMC), revealed that power prices have gone up 11 percent in 2017.

It said that an additional 5,300 megawatts (MWs) of generation capacity which had been added to the national grid, most of it renewable, would trigger the fall but the low prices could not be sustained without government incentives for investing in dispatchable power.

Dispatchable power generation refers to sources of electricity that can be dispatched by power grid operators according to market demand.

The report came after a year in which a number of Australia's dirtiest coal-fired power station, including Victoria's Hazelwood station, were closed with operators moving towards renewable energy sources.

John Pierce, AEMC chairman, said that wholesale electricity prices were the biggest driver of the 2017 price hike, a change from previous years where network costs were the main factor.

"Prices rose sharply this year by almost 11 percent on a national basis as consumers felt the impact of Hazelwood and Northern coal-fired plants retiring and the lack of replacement investment, combined with high gas prices," Pierce said in a media release on Monday.

"But we expect these price rises will be reversed over the next two years as around 4,000 MW of Renewable Energy Target (RET)-funded wind and solar generation enters the system."

The boost to the grid will cause prices to fall but as they do companies will close more coal-fired stations, reducing the energy supply and causing another spike.

"Without investment in replacement dispatchable capacity, wholesale prices will go up again and remain volatile," Pierce said.

"And the rollercoaster will be repeated." Enditem