How China's push for cleaner air is pushing up Australian power prices

Amid the finger pointing and theorising about Australia's rising power prices, there's one culprit often missing from the list: China's determined drive to improve its air quality. Key points: NSW coal generation costs have risen 75pc since 2015, roughly inline with export price movements NSW coal generators are becoming increasingly important price setters in the NEM Renewables growth will push out gas generation, leaving NSW as most expensive power source while cutting industry profits Sure, the Chinese are still burning coal to generate power and make steel, but they are using higher quality Australian combustible rock rather than their locally mined, higher-ash and more sulphurous product. That often leaves NSW black coal generators as the next most expensive power source running, and therefore the east-coast market price setter. Average coal prices and costs of generation 2015 2016 2017 Q1 2018 Average Newcastle export price $76/t $88/t $115/t $130/t Weighted average NSW fuel cost $40/t $45/t $58/t $69/t Weighted average Qld fuel cost $36/t $36/t $35/t $34/t NSW coal generation cost $16 $18 $24 $28 Qld coal generation cost $15 $15 $14 $14 Source: ACCC/ITK Power prices and generation costs: A quick explainer. "This has meant that China wants to buy some Australian coal and that means coal prices are high pushing up costs to NSW generators which then feeds into electricity prices via the bid stack."