If you happen to be looking on at events in South Australia on Tuesday with confusion, let’s keep it simple.
Think of South Australia as an energy survivalist, battening down the hatches and hoarding the canned goods, and perhaps it will start to make more sense.
On Tuesday, the SA premier, Jay Weatherill, committed to sourcing $550m worth of canned goods. A new gas-fired power plant. A massive new battery farm. A “fix” to boost gas supply. New ministerial powers to direct generators and the energy market operator.
A whole lot of canned goods, right there.
Before we conclude something has gone horribly awry in challenging times, let’s be very clear. The SA government has been left with little choice.
Over the past six months or so, the state grid has been exposed as unreliable.
Reading the likely trends, the SA government has made the decision the state can’t be in the position of relying on Victoria for power in emergencies, because Victoria is going to encounter its own reliability problems once the Hazelwood coal-fired plant shuts down.
A state election looms in 12 months, and anyone who spends more than five minutes in SA knows power prices and network insecurity are red-hot political issues.
So on Tuesday, Jay Weatherill made a big decision.
He said we’re going it alone because we can’t rely on anyone else in the Australian political system to deliver what we know needs to happen, in the time we need it to happen.
It’s a big call. But you really can’t accuse SA of impatience, or going off half-cocked. Tuesday’s landing point has been more than 10 years in the making.
For more than a decade, two premiers – Mike Rann and Jay Weatherill – have been begging Canberra to impose a price signal to drive orderly investment decisions in energy assets, and orderly rationalisations of elderly and polluting power stations.
Those efforts, unfortunately for South Australia, and the rest of us, have proven a colossal waste of time.
The stupidity and hyperpartisan recklessness continues apace.
So what of SA’s particular model of survivalism?
As a suite of measures, the Weatherill plan is rational enough.
It addresses the specific problems that have been exposed in state infrastructure over the past few months: not enough generation-ready baseload power in the state, and not enough gas to supply the generation assets that currently exist.
It also makes sense to invest in more technical back-up for renewables, given low-emissions technologies account for a large percentage of generation assets in SA, and will only increase their share if Australia ever adopts a halfway serious climate policy.
But the fixes are not without consequences.
SA has galloped ahead of the Finkel review, which is supposed to be the mechanism to resolve the problems in the national electricity market, assuming politicians are still capable of acting in the national interest.
Given we don’t know whether emissions reduction will be driven in the future by a market mechanism or by regulation, or by something else entirely, SA has cooked up its own policy model, an energy security target, which will compel retailers to source a percentage of their energy from local supply rather than from Victorian coal through the interconnector.
Weatherill says the plan will put downward pressure on power prices; the federal energy minister, Josh Frydenberg, says it will drive up power prices.
After decades of privatisation of government assets it might be hard to wrap your mind around the idea of a government building its very own gas-fired electricity generator – but here we are folks, back to the future.
A big construction project is risky, particularly when the rules of the game are not settled and where the trend in the industry is towards decentralisation. And it’s not a quick fix. It’s hard to see it being in place for next summer. It might be ambitious to think it will be in place the summer after.
Then there’s the regulatory override.
SA is reserving for itself the power to direct the energy market operator in the case of an electricity supply shortfall.
Think of South Australia as an energy survivalist, battening down the hatches and hoarding the canned goods, and perhaps it will start to make more sense.
On Tuesday, the SA premier, Jay Weatherill, committed to sourcing $550m worth of canned goods. A new gas-fired power plant. A massive new battery farm. A “fix” to boost gas supply. New ministerial powers to direct generators and the energy market operator.
A whole lot of canned goods, right there.
Before we conclude something has gone horribly awry in challenging times, let’s be very clear. The SA government has been left with little choice.
Reading the likely trends, the SA government has made the decision the state can’t be in the position of relying on Victoria for power in emergencies, because Victoria is going to encounter its own reliability problems once the Hazelwood coal-fired plant shuts down.
A state election looms in 12 months, and anyone who spends more than five minutes in SA knows power prices and network insecurity are red-hot political issues.
So on Tuesday, Jay Weatherill made a big decision.
He said we’re going it alone because we can’t rely on anyone else in the Australian political system to deliver what we know needs to happen, in the time we need it to happen.
It’s a big call. But you really can’t accuse SA of impatience, or going off half-cocked. Tuesday’s landing point has been more than 10 years in the making.
For more than a decade, two premiers – Mike Rann and Jay Weatherill – have been begging Canberra to impose a price signal to drive orderly investment decisions in energy assets, and orderly rationalisations of elderly and polluting power stations.
Those efforts, unfortunately for South Australia, and the rest of us, have proven a colossal waste of time.
The stupidity and hyperpartisan recklessness continues apace.
So what of SA’s particular model of survivalism?
As a suite of measures, the Weatherill plan is rational enough.
It addresses the specific problems that have been exposed in state infrastructure over the past few months: not enough generation-ready baseload power in the state, and not enough gas to supply the generation assets that currently exist.
It also makes sense to invest in more technical back-up for renewables, given low-emissions technologies account for a large percentage of generation assets in SA, and will only increase their share if Australia ever adopts a halfway serious climate policy.
But the fixes are not without consequences.
SA has galloped ahead of the Finkel review, which is supposed to be the mechanism to resolve the problems in the national electricity market, assuming politicians are still capable of acting in the national interest.
Given we don’t know whether emissions reduction will be driven in the future by a market mechanism or by regulation, or by something else entirely, SA has cooked up its own policy model, an energy security target, which will compel retailers to source a percentage of their energy from local supply rather than from Victorian coal through the interconnector.
Weatherill says the plan will put downward pressure on power prices; the federal energy minister, Josh Frydenberg, says it will drive up power prices.
After decades of privatisation of government assets it might be hard to wrap your mind around the idea of a government building its very own gas-fired electricity generator – but here we are folks, back to the future.
A big construction project is risky, particularly when the rules of the game are not settled and where the trend in the industry is towards decentralisation. And it’s not a quick fix. It’s hard to see it being in place for next summer. It might be ambitious to think it will be in place the summer after.
Then there’s the regulatory override.
SA is reserving for itself the power to direct the energy market operator in the case of an electricity supply shortfall.
And the federal government isn’t taking the survivalism lying down.
SA has been cast by the Turnbull government as the enemy of the pantomime, and it’s not intending to divert from the political strategy it has been pursuing for months.
After hectoring SA for months about not having enough baseload power, and bringing on too large a share of renewables without an engineering fix to deal with the intermittency problems – Frydenberg shifted the goalposts again on Tuesday.
He says the government in Canberra is taking advice about whether Weatherill’s plan is in breach of the national electricity market rules.
This burst of survivalism was reckless, the federal energy minister thought, and would undermine the national electricity market.
Of course survivalism undermines the national electricity market, of course a state solution is less optimal than an elegant national solution.
But seriously, in the real world, what choice was SA left with?
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