Ballooning gas exports to leave Australian – Wind winner: Energy

www.bloomberg.com
10 Apr 2013

Australia's $65 billion of projects to export liquefied natural gas from the east coast are set to push up domestic prices, opening the way for record investment at home in competing energy sources to produce power.

Prices are forecast to double this decade closer to levels customers in Asia will pay for Australian LNG after companies including BG Group (BG Group/) Plc and Santos Ltd, open terminals to ship gas that could have been supplied to the local market. That will help drive the A$33 billion ($34 billion) of wind-and solar power projects developers plan to build through 2020 in Australia, according to data compiled by Bloomberg.

"With high, LNG-driven domestic gas prices, renewable energy is the cheapest source of new electricity generation", according to Kobad Bhavnagri, a Sydney-based analyst at Bloomberg New Energy Finance. "It is quite conceivable that we could leapfrog straight from coal to renewables to reduce emissions as carbon prices rise".

Electricity can be supplied from a new wind farm in Australia at a cost of as little as A$80 per MW when a price on carbon emissions is included, compared with A$143 a MW from a new coal-fired power plant or A$116 a MW from a new station powered by gas, a Bloomberg New Energy Finance report said in February. Solar power in Australia will be competitive with gas in 2015 or 2016, according to Bhavnagri.

Contrasting Policies
Policies embraced by Prime Minister Julia Gillard's government to sell natural gas to the priciest market and tax carbon emissions are making renewable energy more competitive with fossil fuels. New wind farms are cheaper than gas-fired plants this year for the first time, improving opportunities for turbine maker Vestas Wind Systems A/S (VWS) and wind farm operator AGL Energy Ltd. (AGK) Australia has committed to get 20% of its electricity from renewable energy by 2020.

That contrasts with the US, where President Barack Obama approved just one gas-export terminal for destinations such as Japan and has failed to mandate a federal clean energy standard. "Australia has essentially said 'we should be subjected to global markets and let our products move to the highest value use,'' Tim Jordan, a Sydney-based analyst at Deutsche Bank AG, said by phone. ''We're getting a better return by exporting our gas rather than reserving it.''

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