ELECTRICITY by Peter WestmoreNews Weekly
A solution to South Australia's power crisis
, February 25, 2017
The crippling shortages of electricity that caused a statewide power blackout during storms across South Australia in 2016, and the power blackout to 40,000 homes and businesses around Adelaide during the recent heat wave, are signs of things to come.
They will be made worse once Victoria closes the huge Hazelwood power station in March this year. Hazelwood generates 20 per cent of Victoria’s base-load power, and it is not being replaced by any new source of base-load power.
In a country that historically has benefited from more than sufficient electricity generation, how did it come to this? If you separate the propaganda and hype from the facts, the answer is depressingly simple.
For the past 15 years, governments have had blind faith in renewable energy sources such as wind and solar, and have lavishly subsidised renewables against lower-cost base-load power from fossil fuels.
And governments have had blind faith in electricity privatisation as a means of delivering inexpensive and reliable power to consumers. Elaborate and expensive systems have been established to provide “market solutions” to energy customers, both businesses and homes.
Both of these have failed.
Whatever the attraction of using naturally occurring sources of power, the hard fact is that neither solar power (which depends on sunlight) nor wind power can ever provide the reliability of supply that is necessary for industry and commerce, or for households.
The only truly reliable sources of base-load power which are not derived from fossil fuels (like coal or gas) are hydropower, which requires lots of water, or nuclear energy. Both of them have been strenuously opposed by the Greens and the left, and never seriously pursued by governments of any persuasion.
Since the privatisation of most states’ electricity generating assets since the 1990s, governments have relied on “market forces” to deliver low-cost reliable power to consumers around the country.
The theory was that if electricity generating companies were made to compete with each other, and distribution companies had to sell their services to the public, then Adam Smith’s “invisible hand” would deliver cheap, reliable power.
The body that handles this is the National Energy Market. This “market” is run by the Australian Energy Market Operator. Its operations are supposed to be overseen by the Australian Energy Regulator, which claims to “promote efficient investment in, and efficient operation and use of, energy services for the long-term interests of energy consumers.”
With soaring electricity prices and increased unreliability of supply, this market has completely failed to deliver either low-cost or reliable energy across the country.
The hard fact is that both “the market” and renewable energy sources have failed to deliver.
Neither the elaborate machinery set up by the Australian Government to protect Australians from soaring costs and unreliable supplies, nor the financial subsidies given to solar and wind power, have provided affordable, reliable electricity in one of the most advanced countries of the world.
The solution to this national crisis is to abandon ideology – whether the Green ideology of renewable energy, or the “free market” ideology which has failed to deliver low-cost and reliable power – and adopt pragmatic policies which deliver.
South Australian Premier Jay Weatherill seems to have come to his senses by promising to unveil a new direction for the provision of reliable, low-cost power in South Australia, the first state to be deeply affected by the electricity crisis. What that new direction is, we will have to wait and see.
There is a relatively straightforward solution. The South Australian Government could repair the lack of supply in South Australia by buying back the recently closed power stations in Port Augusta, and getting them running again. These alone would avert the immediate threat of blackouts, as they have a combined capacity of 760 megawatts of power.
The SA Government should also buy back the mothballed plant at Pelican Point, just outside Adelaide, which has been operating at half-capacity since 2013. This would put an extra 240MW of power back into the system.
These two measures alone would increase South Australia’s electricity production by about a third. They would remove the state’s dependence on electricity from Victoria, which has proved to be unreliable in the past, and will become even more uncertain in the future.
The Government should also look to buying back the Torrens Island power station, one of the largest gas-fired power stations in Australia, now owned by AGL Energy, if AGL proceeds with plans to close the older A Station, which was built in 1967. This would ensure continued production of 480MW of power.
If the private sector cannot, or will not, provide a reliable supply of base-load power, at an affordable price, it is incumbent on the Government to step in. Surely, that time has come.