A large amount of information and opinion was made available to Quest Events’ Sydney conference last month, which was subtitled ‘Managing rising uncertainty in the NEM’.

Together it provided a compelling picture of a marketplace under stress in a fraught political environment with various classes of customers striving to deal with their own issues.

Mark Collette of Energy Australia (previously TRUenergy) summed up the core market dilemma best when he told attendees: “A structurally oversupplied NEM that forces in additional capacity on zero short-run marginal cost in the face of falling demand threatens the longer-term sustainability of the market.”

Mr Collette argued that there four key issues to be addressed:

  • Rebalancing supply and demand as consumption falls;
  • Ensuring generator shutdowns are efficient;
  • Managing change to the renewable energy target while retaining investor confidence; and,
  • Ensuring that retail prices reflect both variable and fixed costs facing suppliers.

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A major focus of the conference was the gas supply situation, with speakers canvassing the impact on domestic gas supply of the major LNG projects in Queensland, the prospects for exploiting shale gas as a second unconventional resource, and the prospects for prices to rise sharply, affecting both generation development and end-user bills.

The manufacturing sector raised its view that governments need to ensure the availability of adequate supplies of gas for domestic consumers, ensuring that prices are kept down, a position rejected by both the Federal Government and the Coalition and strongly opposed by the upstream petroleum industry.

A key outcome from the event was the need for further discussion on the many issues surrounding gas for domestic use in Australia, in particular its future role in generation and for domestic industry.

In response, Quest Events is currently engaged in the production of the Gas and Generation Conference, which is scheduled to take place in early April 2013.