When the heat was on in eastern Australia last week, there was very little wind.
For this reason, wind-power rich South Australia was relying on brown-coal electricity from Victorian generators 1000km away – and they were paying a pretty price for it.
The wholesale price of electricity in SA spiked to $13,000 per megawatt hour, compared to its usual $150.
Because of the high demand, and the need to send power to SA, spot prices in Victoria also soared – to as high as $10,000, as data from the Australian Energy Regulator shows.
Due to the heavy demand as air conditioners ran hot, the Australian Energy Market Operator offered financial incentive to businesses to reduce electricity consumption; i.e. factories were paid to cut back production.
In Melbourne and Adelaide, hospitals were put on alert. Some dimmed their lights to help avoid demand overload and resultant blackout.
This situation was reminiscent of what occurred in late 2016, when South Australia had an unprecedented whole-of-state blackout and a series of subsequent outages.
In Monday’s edition of The Australian, Federal Energy Minister Josh Frydenberg described the situation thus:
“There is no doubt SA has an over-reliance on wind power, which is not only causing reliability issues but price volatility as well.
“The wind was blowing so little in SA during the heatwave it was only producing 6.5% of its capacity, which meant it needed to import a stack of power from Victoria.”
The “stack of power” was almost a third. The question is, what happens if Victoria’s power is totally allocated, meaning there is none available for SA?
The Institute of Public Affairs has raised this in its latest publication on Australian politics and economics.
Despite having the nation’s biggest capacity for generating wind power, SA contributed just 3.5% of national energy generation on Friday afternoon, the IPA said.
This is why the SA Government has determined that it needs more gas-driven generation and has committed to building a new gas-powered generator.
The benefits of embracing gas-fired power were already showing through last year, as we explained.
Gas is the ideal ‘transition’ fuel to take us towards much greater reliance on renewable energy. Gas power does not need to run continuously (as coal plants do) and can be switched on quickly. It creates only 40-50% of the emissions of black coal, 30-40% of brown coal such as that which is being burned in Victoria to supply SA electricity 1000km away.
Gas-fired electricity has been central to the dramatic improvement in energy security, consumer and business prices and the carbon emissions profile in the USA.
It is a model which could easily be adopted in Australia, where we have abundant natural gas – and track record and expertise to develop it profitably and safely.