A new report by the Grattan Institute has found that knee-jerk political reactions to the energy crisis are creating a risk of more blackouts and outages.
The biggest problem is the demand for energy in the summer months, with the report saying that the next flashpoint could come with the first heatwave of the year.
The report – Powering Through – states that unless energy authorities find extra capacity, there could be a repeat of the South Australia blackout as well as potential outages in Victoria as a result of the mothballing of Hazelwood. You can read or download the Grattan Institute summary.
Six months to draw up coordinated National Energy Policy
The Grattan Institute says that regulators have about six months to agree on broad national reforms to energy policy. Uncoordinated individual actions such as the Federal Government’s decision to buyout and expand Snowy 2.0 and South Australia’s plan to fund 100 megawatts of battery power simply won’t do, the report states.
The Grattan Institute Energy Program Director Tony Wood said: “It is imperative that a national policy and plan is needed because rushed responses by politicians exposed consumers and businesses to higher energy prices and put the Government’s emissions reduction targets in danger.”
Grattan describes South Australia as “the canary in the coalmine” given that wind has supplied more than half of its electricity consumers so far in 2017, while most other states get less than 10 per cent from wind and solar.
South Australia is exposed to outages given that, at times, wind supplies 75 per cent of the state’s energy needs, the report said.
The report urged reforms in the national energy market with the creation of new rules to ensure a reliable supply and efficient responses when part of the system breaks down.
A decade of toxic debates, backflips and mixed messages
Speaking on ABC’s AM programme, Mr Wood gave a damning verdict: “A decade of toxic political debates, mixed messages and policy backflips has prevented the emergence of credible climate change policy.”
“But if governments take matters fully into their own hands, the results are likely to be painful.
Grattan calls for mothballed generators to be put on standby
While a national energy security plan is negotiated, the report suggested some currently mothballed generators should be recalled to ensure reserves are on hand in an emergency in the short term.
Mr Wood said the “go it alone” plans created uncertainty and risk, destroying opportunities for the National Electricity Market (NEM) to drive new investment in Australia for low-cost, low-emissions electricity.
“If that (lack of investment) happens, the NEM will have been judged to have failed when it will have surely been systemically, if unintentionally, destroyed,” Mr Wood said.
Energy demand response concept gains traction
Power generators should be rewarded for being flexible and responding quickly to shortages, Grattan suggested.
At the same time, the report said consumers should receive financial incentives to relieve stress on the system by limiting the power they use at peak times. The recommendation comes just a few days after a new $22.5 million demand reduction pilot project for businesses was announced by ARENA and AEMO in South Australia and Victoria.
The Grattan report also said the Australian Energy Market Operator (AEMO) has “a critical job” to avoid blackouts in South Australia and Victoria next summer.
It also pointed to the possibility of short-term outages in New South Wales, given pressure on the state power grid during heatwave conditions earlier this year.
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