Things got serious in Australia’s energy sector as soon as the wind power debacle in South Australia started making the front pages of Australia’s metropolitan dailies.
For a while, the happy citizens of states (other than SA) not wedded to the wind power delusion could quietly snigger at the mess South Australia’s hapless Labor government has made of its power supply and economy, as a result.
But, in a what-goes-around-comes-around moment, the Australian Energy Council’s, Chief Executive, Matthew Warren – in the lead up to the COAG Energy Summit – laid out a warning: while SA is clearly suffering from a confirmed case of ‘Wind Turbine Syndrome’, it’s as contagious as the Ebola virus, just as dangerous and is heading for the other Australian States, right now.
Government must jump-start energy reform before lights go out
The Australian Financial Review
16 August 2016
Energy ministers will meet next Friday suddenly faced with the very real prospect of an electricity system in peril. The livelihoods of more than a million South Australians depend right now on the decisions they make. So too does the longer term delivery of an efficient, reliable and sustainable national energy system.
First, it’s time to admit we have a problem. Our electricity system is not working. As currently configured, it is demonstrably not delivering against its three basic objectives: keep the lights on, remain affordable, reduce greenhouse emissions.
This is not the failure of the design of the national electricity market in the 1990s. It is the result of a decade of state and federal government meddling with an extremely complex system. Good policy has succumbed to bad politics on energy. Let’s have an emissions trading scheme; let’s not; let’s just subsidise lots of renewables as they’re more popular; let’s subsidise lots of rooftop solar as well; actually let’s have an emissions trading scheme; let’s repeal it; let’s do nothing for a while; let’s propose even bigger state renewable energy targets; let’s freeze development of new gas fields even though we have a tight domestic gas market; let’s do nothing to transform the way we use electricity by changing the way we charge for it; let’s blame everyone else.
Recent and current political events (Brexit, Trump) remind us of the growing peril of succumbing to anti-intellectual, anti-expert populism, yet that is precisely what we are doing right now with the nation’s energy system. It needs to stop.
Last month during a still, cold snap in South Australia, spot electricity prices spiked leaving many industrial customers exposed. South Australia sources around 41 per cent of its generation from wind and solar. This is extremely high by global standards, particularly for a small, relatively isolated network.
Self-evidently, this type of generation mix exposes the state to critical events like windless cold snaps or heat waves. It was exacerbated by the closure of the state’s last coal fired power station in May this year. The Northern power station closed because it couldn’t operate commercially given the amount of renewables in the grid.
The situation was exacerbated by the temporary outages of the interconnector running into Victoria as it undergoes a major upgrade. The State Government requested some mothballed gas generators be brought back into service, and a crisis was declared by some commentators.
These events have been predicted by the energy industry and others for years. It is wrong to simply blame renewables any more than it is wrong to simply blame lack of competition in South Australia, high gas prices or suggest some new fossil fuel conspiracy.
South Australia isn’t the problem. It’s a symptom of a much bigger problem. A decade of political tinkering has left us with an electricity system that doesn’t work. It doesn’t deliver the right investment in the right place, it doesn’t signal a reliable and efficient transformation from high to low emissions generation, it does nothing to enable greater demand flexibility by empowering consumers to consume energy when its abundant and conserve when it is more scarce.
Instead we have virtual investment paralysis in new generation in Australia, resulting in a renewable energy target that is still appears unable to reach that target without even more government support. This results in curiosities such as: the ACT government sponsoring the latest wind farm in South Australia; or the ARENA grants programme underwriting wind and solar deployment, rather than supporting R&D in new technologies as per its original remit. Neither of these approaches are suitable for scaling up to the level required.
We have still no clarity about the future role for Australia’s existing fleet of coal fired generators, even though they supply most of our electricity and many will need to be variously phased out to meet current and future emissions targets. We have an abundance of gas reserves to help manage this transition yet we have managed to create a tight domestic gas market, hurting both industrial and residential customers.
In the absence of a national energy and climate strategy, state governments are rolling out their own schemes, with scant regard for the consequences. A 40 per cent renewable energy target in Victoria would see more than 50 new wind farms in that state in 8 years. There is no plan about how South Australia would get its back up supply from Victoria when the wind isn’t blowing. South Australians have every right to be concerned. If we continue with business as usual this concern will quickly become contagious.
The natural inclination of governments faced with a crisis is to build something. There is an enthusiastic debate about whether South Australia should build more interconnection to Victoria, or New South Wales, or Queensland or even Western Australia. Others favour installing batteries, or turning the dams in the Adelaide Hills into a pump storage. Many of the loudest voices are the proponents of some of these solutions.
The biggest risk is that we just build a large, expensive, stranded asset that is paid for through higher electricity prices for decades. After all, it’s only a few years since NSW and Queensland governments required their state-owned electricity networks to build duplicate assets as a response to a rash of blackouts in Sydney and Brisbane, leading to cries of gold-plating from consumers footing the bill for these assets. Remarkably we seem to already be forgetting the lessons of that episode.
The problems in Australia’s energy system will not be fixed by a shiny new toy. It’s almost certain that new infrastructure will be needed, but we won’t really know what to build until we know how it fits into a new and comprehensive national energy strategy. The one we don’t have yet.
Energy has historically been seen as stable and low risk. Those days are gone. The new normal is uncertainty; uncertainty over new technology costs, capacity and timing technologies, uncertain demand trends, uncertain consumer behavior.
If business is be expected to build the clean, smart energy system of the future, then it will need government to reduce risk, not add to it. That can and should start this week.
Australian Financial Review
Matt does a pretty fair job – for a former wind industry front man (he was once top dog with Wind Energy Australia, the lobby group that now runs under the tag of the ‘Clean Energy Council’ – run by Infigen’s CEO, Miles George) – in that sharp little analysis of what Australians can all look forward to.
But, somewhat sloppily, Matt appears to fall for the line about fixing the wind power mess by simply popping out to the shops for a few Terawatt/hours of battery storage.
Matt, of all people, must know that there isn’t a single example of grid-scale battery storage of electricity operating anywhere in the World.
So why pander to it, Matt? It’s intellectually lazy to play with the public’s imagination about something that simply doesn’t exist; and which, engineering miracles aside, probably never will.
Then there was his rundown on the political tinkering – that’s wrecked the once solid power system enjoyed by all Australians – which Matt reckons “does nothing to enable greater demand flexibility by empowering consumers to consume energy when its abundant and conserve when it is more scarce.”
Ah, Matt – that’s precisely what’s happened in South Australia: there are now plenty of occasions when the whole state will only be consuming energy when the wind is blowing solidly for a while; and plenty of other occasions when hundreds or even tens of thousands will be ‘conserving’ it when the wind stops blowing – albeit on an involuntary basis.
In SA power ‘scarcity’ is a matter driven by meteorology: wind power dropouts lead first to ‘load-shedding’ – cutting power to suburbs or whole regions in an effort to keep at least part of the grid operating; and, when the drop in wind power output is too sudden or precipitous for that tactic to hold the line, the entire state is plunged into Stone Age darkness.
What Matt nails rather nicely, though, is that the “problems in Australia’s energy system will not be fixed by a shiny new toy”.
However, what Matt needs to start trumpeting about is that it was a childish fetish with windmills – the original ‘shiny new toys’ – that all started in South Australia 15 years ago, that has caused the economic and social disaster that inevitably unfolded there; and which will soon bust SA’s borders to infect every other state with their very own case of ‘Wind Turbine Syndrome’. Unless sanity, sense and reason gets there first.