Editorial in THE AGE, 17 June 2022, …. https://www.theage.com.au/national/energy-crisis-should-hasten-push-into-renewables-20220617-p5auk5.html
If anything good has come out of this week’s energy crisis it is the realisation that our electricity market is no longer fit for purpose – that after years of inaction we have finally been found out. The question is: what, exactly, can be done?
It’s well known now that the crisis – which threatened blackouts across the eastern states and will no doubt be felt in our energy bills in coming months – was the result of a “perfect storm” of unlikely factors. Among them was the jump in coal and gas prices caused by the war in Ukraine; the east coast cold snap; floods at coal mines; maintenance outages at half a dozen major coal-fired power stations; some complex machinations in the national energy market; and, an unlikely villain, clouds, which reduced the generation of solar energy.
What we learnt in the meantime was how fragile the national network has become. Coal-fired power plants, the workhorses of the system, are getting older, and underinvestment in their upkeep shows up in failures and long repair times. The gas generators that take over some of their load are now hostage to international price spikes, and supply from renewables, though cheap, is intermittent. All of this has prompted extraordinary interventions from the national regulator to keep the lights on.
As business columnist Stephen Bartholomeusz wrote this week, none of this should have come as a surprise. It’s the result of “more than a decade of neglect, political impasses and the internal wrangling and consequent inertia within the Coalition government that was in power for most of that period”.
Those on the right are clinging to the old playbook, with Opposition Leader Peter Dutton claiming the crisis occurred because the power industry had been “spooked” by the ALP’s plans to promote renewables “too quickly”. Nationals leader David Littleproud floated nuclear power (a debate we perhaps should have again, but which will not solve today’s pressing problems).
Prime Minister Anthony Albanese, meantime, is clearly hoping the electorate blames the previous government, telling Sunrise on Friday “you can’t fix 10 years of inaction in just 10 days”. Yet the blame game will quickly grow stale, especially if there are further threats to our power supply. We want somebody to talk about solutions.
Short term, government and regulatory intervention in the free market, while a little alarming, is clearly necessary. The Australian Energy Market Operator this week showed it at least works as a mechanism of last resort, when it first capped the price of electricity, then directed recalcitrant suppliers to generate power, then suspended the spot market entirely.
The NSW government, meanwhile, has been granted emergency powers to secure supplies of coal if necessary. And talks continue about our gas exports, with an “agitated” federal Industry and Science Minister Ed Husic telling the ABC on Friday we should consider a domestic gas reserve, as has apparently been implemented successfully in Western Australia.
In an ideal world, governments should not be meddling in the business of wholesale energy production. Rather, they should provide a workable and stable framework into which the industry generators can supply.
Coal is back in the spotlight but it remains a twilight industry, according to Tony Wood, energy director at the Grattan Institute, who told this masthead, “There was no point at which building a new coal-fired power station could have solved the problem. And, of course, it would have become a stranded asset pretty quickly that was outcompeted by cheaper renewables.”
Meddling with our gas exports risks harming our international reputation and would impact export income. And the regulator doesn’t want to be giving orders to producers for any longer than emergency conditions dictate.
Longer term, as we have argued previously, and as various market players agree, there is no reason why the bulk of our power can’t come from renewables – solar, wind, hydro – backed up by batteries, hydrogen (once we work out how to do it) and, for the time being, gas. Only in this way can Australia meet the government’s commitment to reduce carbon emissions by 43 per cent below 2005 levels by 2030.