SA July power spike ‘a canary in the coal mine’ for the energy sector

wind farm

The Grattan Institute has released a report into South Australia’s July power price spike saying it was ‘a canary in the coalmine’ for Australia’s energy sector.

Grattan Institute energy program director Tony Wood co-authored Keeping the lights on: lessons from South Australia’s power shock with energy fellow David Blowers.

They analysed the confluence of events that caused the wholesale price of power in South Australia to jump to $8900 per megawatt hour, compared with the eastern states’ price of $50.

“On the night of 7 July, the wind was hardly blowing in South Australia and the sun had gone down. Two coal plants had closed earlier that year, and an electricity connection that provides power from Victoria was effectively closed for upgrades,” the report said.

The blame game that followed and criticisms of renewable energy sources as unreliable were ‘alarmist and unfair’, according to the report.

“The market worked, the lights stayed on and prices have since fallen to levels more comparable with the eastern states,” Mr Wood said.

“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 it’s global climate change commitments.

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

In the report, Mr Wood urged action by state and federal governments including using next year’s review of climate change policy to develop a credible plan going forward.

“The Commonwealth and state governments must 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.”

For more information or to read the report, click here.