It started with a solar boom, many small home scale solar roofs popping up everywhere. Australia has a free trade agreement with much of the world, including China, and solar panels have literally dropped to 1/50th of the price they were in 1990 ($10/W to $0.2/W today). A shout out to the work that was done to establish dynamic grid pricing too.
Anyway that caused power prices to reliably go negative during the day as the solar boom led to too much energy being produced. So everyone started buying batteries (you can even get live feed in/out pricing as a consumer). In fact the government even today will pay you a $3000 subsidy to go install a battery. This is in a country where people can buy cheap batteries with no tariffs (free trade's amazing, seriously!). So everyone who could started doing it. For those in apartments etc. that couldn't easily install solar and batteries they won too since the entire power grid is now half the price.
Another consequence of all this, aside from the cheap power prices during a datacenter boom and Hormuz blockade is that fossil fuel usage is plummeting. Particularly gas https://ieefa.org/resources/slump-eastern-australia-gas-dema... . No need for a gas peak power plant when the grid is packed with batteries. Which is helpful since one of the main issues with the current blockade is a lack of gas globally.
Australia produced 42% of it's electricity from domestic coal in 2025.
https://ourworldindata.org/profile/energy/australia#what-sou...
If you read the article, most of the decline in gas consumption in Australia is from changes in industrial usage. Residential demand is only down by 6% and part of that is likely due to the effective ban on gas in new residential construction which started in 2023 in Victoria. Prior to 2023 residential gas usage was increasing.
A 50% price decline doesn't imply there's 50% less demand for petroleum. If 6% less demand is all the margin consumers need to get their supply, then price can drop quickly. It's all in the margins.
What is the best way to learn more about this, are there any examples? This seems a bit counterintuitive to me.
There is a (IMHO) good explanation at https://www.next-kraftwerke.com/knowledge/what-does-merit-or...
Keyterms: "marginal cost", "merit order", "market-clearing price".
Not fully sure this is that, but it reminds me of something an American friend explained about their business under the Trump regime (as a rant about how laypeople were deeply under-reacting to the tourism decline):
If it takes 100 tourists to pay his bills, taxes, staffing, and other expenses for the day, the next 5 tourists represent the profit. A tourism decline of 10% doesn’t mean 10% less profit, it means the catastrophic inviability of the whole business as it’s currently structured.
That assumes he has a fixed profit per person.
In reality most business can do things like cut hours for staff, postpone upgrades or long term maintenance, cut amenities, raise prices etc…
If most businesses were structured in a way that a 10% decline in customers immediately puts them out of business, any economic downturn would be an unrecoverable positive feedback loop for the economy.
its simple demand and supply if you have 100 buyers for 99 the price will shoot up but if you have 100 seller and 99 buyers sellers will drop price so. Previously gas turbines were charging through the nose when sudden demand spikes but now batteries are competing with them and pricing them out
This sounds like Price elasticity of demand which is a measure of how sensitive the quantity demanded is to its price.
https://en.wikipedia.org/wiki/Price_elasticity_of_demand
It would be useful to know if the industrial use is factories replacing their use with other sources (e.g. I have read that food manufacture is switching to electricity in Denmark, although it can be held up waiting for a grid connection if there's a data centre ahead of it).
Or, did they improve their efficiency.
Or, have they closed.
Or outsourced their pollution to a foreign supplier.
Carbon taxes collapse as they don’t account for imports correctly.
There is a solution for this, called a CBAM, Carbon Border Adjustment Mechanism. One just went into force across the EU. It should appeal to US politicians, because it advantages the relatively clean US manufacturing base.
It has a whole section on the impact of power policy though and 15% of power mix to 7% for gas is significant. Coals fall is notable too.
Australia never had much residential gas usage. Mr he very vast majority of residential homes don’t even have gas. No need for a furnace.
Pretty much every house in Victoria had gas, and gas furnaces, winter is cold enough
I grew up in Victoria in a town of 20,000. Not a single house has gas.
I have made this argument several times that capitalism literally solves the issue of solar panels if the market allows arbitrage and true dynamic pricing.
Good to see now a working example that capitalism is an excellent system of rewarding those who solve inefficiencies in markets
This only makes sense way downstream of massive subsidies, not the least of which is China determining at a federal level that they wanted to produce an obscene amount of solar panels.
And now it's complicated because the ideal move would just be to say "thank you" and buy all the cheap panels and batteries, but that hollows out your own industry.
There were significant state subsidies and regulation changes to encourage home battery installation. That's a lot less "free trade" driven than the GP post indicates. Is that still capitalism being an excellent system?
a $3,000 battery subsidy is the opposite of free trade.
free trade's amazing, seriously!
Time was, mercantilist countries would use foreign colonies for resource extraction; and sell the goods manufactured with these resources back to them.
It was great for everyone!
To a degree, this is Australia in this case, no? Resources are extracted from Australia, exported to China, turned into high value goods and sold back to them. In this case, it's exactly what OP is happy about!
Yes, everyone is always telling me how great colonialism was for the locals.
...and then the "colonies" figured out how to weaponize it and turn the balance in their favor.
Or, not quite: the workers are being exploited just like they were during the colonial period. But at least now their rulers have power over our rulers that they didn't have before. So they get to be happy about that as they make novelty items out of toxic plastic for Temu.
Modern China is a vastly better place to live than China of 60+ years ago. Many countries are nicer places to live, but 1+ Billion people are simply better off making the “exploitation” narrative ridiculous.
Porque no los dos? Given the number of billionaires in China, it can both be true that workers are exploited, meaning they could earning more for less hours, and that the living conditions are better on average and possibly medianely than the local minima of 1966.