An energy crisis in South Australia created by an over-reliance on untrustworthy and expensive wind and solar will force the state Labor government to seek greater access to cheaper coal-fired electricity from the eastern states.
This comes amid rising concern that federal renewable energy targets will force other states down the path taken by South Australia, which has the highest and most variable energy prices in the national electricity grid.
South Australian Treasurer Tom Koutsantonis, who is also the Energy Minister, yesterday put the eastern states on notice, vowing to “smash the national electricity market into a thousand pieces and start again”.
He warned other states that the energy crisis was “coming to get them”.
“This is coming to Victoria, this is coming to NSW … every jurisdiction is facing what we’re facing now,” the Treasurer said.
South Australian Labor’s admission that it needed urgent reform of the national energy market rules, so that in addition to upgrading connection with Victoria it also could tap into NSW baseload power, reveals the vulnerability of its reliance on renewables. The last coal-fired power stations in South Australia closed in May.
Wind and solar make up more than 40 per cent of the state’s energy mix under a green policy agenda driven by Labor, in power in South Australia since 2002.
Several major companies, including BHP Billiton and Arrium, this week warned Mr Koutsantonis of possible shutdowns because of high energy prices, forcing him to plead for a temporary power spike from a private owner of a mothballed gas-fired power plant. Private energy supplier ENGIE fired up its Pelican Point plant near Port Adelaide for a short time yesterday, bringing an extra 239 megawatts of power into the grid.
Mr Koutsantonis said the federal government had encouraged South Australia, which has the best conditions for wind farms, to chase the energy source as part of Australia’s renewable energy target of about 24 per cent by 2020.
“Wind is paid by the commonwealth to produce power … if you are going to pay wind farms to produce electricity regardless of demand, you better make sure that is distributed equally across the country because you can’t have a national policy implicating just one state,” he said.
He called on Malcolm Turnbull to immediately appoint an energy minister and schedule an urgent meeting of federal and state ministers to undertake energy market reform.
“If you want a true national electricity market, you really need to have all of the states interconnected.
“What we have is a series of state-based markets with very poor interconnection between them,’’ Mr Koutsantonis said.
The market was supposed to integrate the east coast states with South Australia and Tasmania to allow the free flow of electricity across borders via a series of interconnecters, he said. It excludes West Australia and the Northern Territory.
An upgraded interconnecter with Victoria is scheduled for completion next month, and South Australia also wants a larger interconnecter with NSW, at a cost of between $300 million and $700m.
“Victoria has multiple markets it can draw from; we have one, NSW has two and Queensland has one. That’s not a national electricity market,” he said.
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