The COAG Energy Council, comprising state
and territory energy ministers, will meet on Friday.
Top of the agenda will be South Australia's
state-wide blackout, its causes and consequences.
Already there are two reviews underway.
The first is by the Australian Energy
Market Operator (AEMO) into how the extreme weather event led to a cascading
effect, shutting down the system.
The second is being undertaken by the
Australian Energy Market Commission, in conjunction with AEMO, and is looking
at the broader impacts of the changing energy mix.
In particular, it is examining the increase
of intermittent generation from wind and solar, and what subsequent reforms we
need to ensure system security across the national electricity market.
It is envisaged that both reviews will be
completed by the end of the year.
The government is unapologetic that when it
comes to energy policy our first and foremost responsibility is energy
While the proportion of renewables is
steadily on the increase, driven by both federal and state-based targets, great
care must be taken to ensure that the pace and nature of this change does not
compromise the stability of the system.
Intermittent generation poses two
significant challenges for energy security.
First, it doesn't generate a consistent
quantity of power, when the wind is not blowing and sun is not shining,
therefore increasing that jurisdiction's dependence on interconnectors, which
supply power from another state.
Second, it doesn't generate a consistent
quality of generation, as do hydro, gas and coal.
These later sources of energy can help
stabilise the system because they can readily respond to rapid changes in
demand and supply to ensure that frequency is maintained at the necessary 50
hertz, while also producing sufficient inertia, by what is termed synchronous
generation, which is necessary for enabling the system to cope with sudden
It is exactly because these characteristics
are not present in intermittent generation that AEMO has sounded a warning.
In fact in an August report, AEMO
highlighted that if South Australia was to suddenly lose its interconnectors
providing electricity from Victoria there would be "a high likelihood of a
full region blackout".
It points out that while the Heywood
Interconnector has been down in such circumstances on four occasions since
1999, the likelihood of a full blackout "increases as the region becomes
more reliant on energy imports over the interconnector and wind and rooftop PV
generation to meet demand".
This is exactly why the states need to put
the brakes on their unrealistically high state-based renewable energy targets.
In the case of South Australia and
Queensland they are 50 per cent by 2025 and 2030 respectively and in the case
of Victoria it is 40 per cent by 2025.
Transitioning to a lower emissions future
is important, but until the states can demonstrate their policies won't have a
negative impact on energy security it is irresponsible to proceed with them.
It is also worth bearing in mind that the
Grattan Institute has said "unilateral action by states or territories is
likely to distort the implementation of national policies and increase costs,
with no net environmental benefit".
At the federal level, it is also incumbent
on the Leader of the Opposition, Bill Shorten, to explain how he proposes to
reach Labor's 50 per cent Renewable Energy Target by 2030 without undermining
energy security and energy affordability.
Despite adopting this target in 2015, the
opposition maintains it will provide the design details of its scheme by
Between then and now we have to simply
guess how it will do it.
Labor does however accept that its target
would require around 2000MW of new renewable energy infrastructure to be built
every year for a decade.
This is the equivalent of installing 10,000
new wind turbines at a cost, according to Bloomberg New Energy Finance, of $48
This is a capital spend that can't be found
anywhere in Labor's election costings.
Then there is also the question of what
impact Labor's target would have in driving electricity prices higher.
We know the average price of generation for
coal is about $50/MWh, for gas $80/MWh and wind about $100/MWh, with solar
being marginally higher.
No doubt with technological change these
prices will come down over time.
But right now Labor's plan is a recipe for
higher household bills.
This is no surprise from the party which
gave us the carbon tax.
The blackout in South Australia has brought
energy security into focus as never before.
Premier Jay Weatherill may talk up his
"big experiment", but the consequences of the rapid take-up of
intermittent generation is not confined to his state.
That is why the COAG Energy Council process
is so important, for it is here we must find more common ground and do all we
can to guarantee security and affordability of energy supply across Australia.
Frydenberg is the federal Minister for the Environment and Energy and is the
chairman of the COAG Energy Council