Energy March 23
Posted on Thursday, 23 March, 2017
Mr RAMSEY (Grey—Government Whip) (12:53): Thank you very much, Mr Deputy Speaker. I want to speak this afternoon about electricity. The focus has been on South Australia and what has become the rolling disaster of electricity supply in South Australia, it must be said. The cause of this can be linked back to the premature closure of Alinta's coal fired power station in Port Augusta. It was not so long ago that Alinta expanded their coalfields at Leigh Creek and gave them a life through to 2030. They and we expected that they would operate that plant until around 2030. If that had been the case, that would have given time for the development of the transition away from fossil fuel to renewable energy—time to build storages, and we do not fully understand how we are going to do it, and time to develop new technologies to address the shortfall.
South Australia now has an installed capacity of wind of well over 50 per cent, which delivered around 41 per cent of our total consumable electricity in the last 12 months. That led to a period of time when we had oversupply in the market. On average, our wholesale prices were at around $45 per megawatt hour, and Alinta became very concerned about this around 2011 or 2012. I had a lot of ongoing discussions with the company at that time.
I also took the opportunity to meet with the commissioner of the Australian Energy Market Commission, and I said to him at the time, 'If we allow Port Augusta to go offline prematurely'—and remember that at that time prices were very low, on an average basis, because the market was being flooded. They were losing money. They were losing millions of dollars a month—'that will plunge South Australia into darkness.' I was assured at the time: 'Mr Ramsay, we are in the process of upgrading the Heywood interconnector to Victoria, and we think, even without Port Augusta, the South Australian grid will continue to operate soundly.'
Mr Craig Kelly: Wrong, wrong.
Mr RAMSEY: My colleague reminds me that that was completely wrong—and, in fact, the upgrade has only just been completed in the last 12 months. No sooner had we completed that upgrade to Victoria than Port Augusta shut down, and we found out that it was not sufficient. Even when it is working correctly it is not sufficient. I emphasise this fact by pointing out that in the 2016 calendar year the average spot price in South Australia was a bit over double Victoria's—about $104 per megawatt hour. Now, remember, I was just talking about what drove Alinta out of business, and that was the $45 per megawatt hour. So once we removed that base load generator the price doubled. We are running at double Victoria's price.
A lot of people have raised with me the issue of reliability in South Australia, and they are very right to point to it. But it is an absolutely secondary issue. It is a secondary issue because electricity in South Australia has become so expensive that investors are leaving the state. Our young people are leaving the state. Businesses that were planning to expand are not expanding. Those that can relocate do so, and even those that are using vast amounts of electricity are questioning their operating practices and their reason for being in that space. There are a number of things we can do about that, but it will not be a return to coal for South Australia; I am very confident about that. We do not have high-quality coal reserves; we have brown coal, which is inherently a higher production platform for CO2 emissions. So it will be gas and it will be renewable.
Gas is an absolute problem at the moment. I am very pleased that the Prime Minister convened a meeting of people in the gas industry to try and work out how to bring about better domestic supply. That was only caused by scare merchants propagating an argument against tight gas—that it is unsustainable. It has been Science Week in Canberra, and I met with some people from CSIRO who understand the science of hydraulic fracturing. These are absurd arguments that are propagated by the green Left, who are just totally opposed to fossil fuel in any shape or form.
We have so many challenges in front of us, and a lot of the answers to them will be renewable. But I say to the South Australian government: no more renewable unless—and I underline 'unless'—it includes storage.
Question agreed to.