SA power cost blow-out: Some will say I told you so.

p2310-wind-powerLETTER TO THE EDITOR

 

Sir – Soaring South Australian wholesale electricity prices in July have exposed the urgent need for Australia to develop climate change and energy policies that combine to maintain reliable, affordable and sustainable power.

 

Our report “Keeping the lights on: lessons from South Australia’s power shock” documents how the state’s wholesale electricity price averaged $230 per megawatt hour over the month – three and a half times the price in eastern states.

 

The price even skyrocketed to nearly $9000 per megawatt hour on July 7, when a lack of wind, coupled with the closure of two coal plants and the temporary closure of a back-up electricity connection meant that gas was generating nearly all the state’s power needs.

 

The intermittent nature of wind – which now generates about 40% of South Australia’s electricity – creates challenges for the price and reliability of power generation in the state.

 

Yet while the high July prices triggered a furious blame game, the report argues that criticisms of wind farms, gas generators or the electricity market are alarmist and unfair.

 

The market worked, the lights stayed on and prices have since fallen to levels more comparable with the eastern states. Nevertheless, the incident exposed two big potential problems for Australia’s power future.

 

First, the nation has no credible policy to reduce emissions in the power sector and enable Australia to meet its global climate change commitments.

 

Second, the current design of the wholesale electricity market may not provide the secure and reliable power that Australians take for granted.

 

The report urges Commonwealth and state governments to take three actions:

 

• Use the 2017 Commonwealth review of climate change policy to develop a credible plan that all states support and that works with the electricity market.

 

• Review the market to ensure that power flows reliably and affordably.

 

• Explain that a transition to a low-emissions future will happen and that it will cost money.
These events in one state were a canary in the coalmine, warning of the risks in our power future. It is time to listen.

 

Tony Wood

Energy Program Director

Grattan Institute

 

[ED – The Alice Springs News Online has several months ago asked the Centre for Appropriate Technology in Alice Springs, an independent NGO with expert knowledge in that field, for an analysis of the hotly debated decision by the Giles Government to spend $75m on 10 gas powered generators at the local power station. That analysis has still not been provided.]

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