An energy-intensive recycling plant in South Australia announced it would shut down this week, crippled by skyrocketing power prices.
The news came as an economics consultant predicted that imminent price rises would see SA jump to the highest priced electricity in the world.
According to economist Bruce Mountain, SA would jump above Denmark, with the anticipated 18% rise in wholesale prices, from 1 July.
The prediction followed the closure announcement by Adelaide plastic recycling business Plastics Granulating Services, which said it had seen its monthly power bills increase from $80,000 to $180,000 over the past 18 months – and this is before the imminent new price rise.
The irony of the situation is that this recycling company has been skewered by policies intended to improve the environment by replacing fossil fuels with renewable energy.
In the past, the SA Government has trumpeted its vision for a renewables future.
However, global leadership on electricity prices is not an honour the SA Government was expecting to be part of the plan.
Greens and enviro activists have lauded the SA Government for its approach and urged it to go further. However, the engineering and political repair job needed after rising prices and electricity blackouts is seeing the Government go into reverse gear, looking to the greater reliability of natural gas as a fuel to complement intermittent renewable energy.
Prime Minister Malcolm Turnbull has dubbed the SA situation a “failed experiment” in overly zealous rollout of wind and solar power without the necessary back-up.
Realising its predicament, the SA Government has turned to natural gas to try to reverse the double whammy of rising prices and weaker reliability of supply for SA electricity customers.
The Government was forced to move after a series of power cuts, including an unprecedented whole-of-state blackout caused enormous upheaval and losses among industrial manufacturers and a suggestion that small businesses buy diesel generators to give themselves protection against unexpected power outages.
Visitors to Denmark would be familiar with the sight of wind farms in the stretch of water separating Denmark and Sweden.
This is one of many large windfarms in the small and prosperous northern European country.
But Denmark’s people, like many others in Europe, are paying a high price for their renewable energy focus, and they are depending on imported coal-fired and nuclear energy to fill the gaps in their electricity grids.
The Washington Post called Europe a “green-energy basket case” because of the failure of its carbon emissions reduction program to achieve its ends.
Countries such as Denmark, Germany and Spain trumpeted their green credentials, but the reality was their power prices were the world’s highest and their electricity was often imported in significant part from coal-fired producers (the highest emission form of baseload electricity generation).
There is a striking similarity between Denmark and SA. In 2015, Denmark became the highest green energy producer, with wind power accounting for 42% of its needs.
That is the same percentage which has been achieved with SA’s rapid rollout of wind and solar power following the closure of the State’s coal-fired power generation.
But, as in the Hitch-hiker’s Guide to the Galaxy, 42 turns out to be something of an anti-climax as the ‘answer to life, the universe and everything’.
Rather than delivering energy nirvana, the rush to renewables has made SA dependant on the electricity transmission interconnector from Victoria to keep the lights on when the wind is not blowing and the sun is not shining. That Victorian electricity has to be transported almost 1000 kilometres (with as much as 20% lost in transmission) and is drawn from a brown-coal generation plant (the most carbon intensive).
So, with the necessity for brown-coal electricity inefficiently transported 1000km as back-up, the environmental gains of the renewable energy generators are dramatically reduced, if not obliterated. Local employment and economic activity were also permanently lost when SA’s coal-fired generation was shut down.
Now the SA Government is planning for a new $550 million gas-fired power plant to restore stability to the market and ensure electricity supply continuity.
SA businesses and consumers will be hoping that the Victorian interconnector holds up in the meantime.