Archive for October, 2016

Moving on — to where?

So where are we in the wordy aftermath of the South Australian power blackout?

Most importantly, the majority of the high voltage network in the State has been restored, allowing all mass market customers to be supplied although some large industrial customers remain without full power. The efforts of lines crews and engineers in achieving this should be recognized.

Next, the inevitable ministerial-level post-mortem will be kicked off on Friday by an “emergency” meeting of the CoAG Energy Council – which at least will have the merit of allowing nine governments to be briefed by officials and agencies on what actually happened when the blockbuster storm struck South Australia.

Politically, the event has already morphed in to round umpteen of the long-running slanging match between the Coalition, Labor, the Greens and various fringe-dwellers. In what I see being described overseas as the environment of “post-truth politics,” the chances of a coming together in the national interest would not appear to be high.

Looking for a bright side, is it possible that a broader approach to low and zero emissions generation could come in to focus at the higher levels of government?

Can one hope that the need to react politically to the SA blackout is a catalyst for this better approach? In this regard, the Prime Minister’s commitment to also engage first ministers on energy security through CoAG should not be overlooked

Here, it should be pointed out that a federal administration serious about tackling the long-term issue could start re-examining the case for nuclear power as well as both how to resurrect gas-fired generation in the southern States and how to pursue carbon capture and storage meaningfully. This is the so-called “fuel neutral” approach, strongly advocated by a number of industry associations but anathema to green activists. All of the above goes hand-in-hand with the need to develop a plan to cut over-capacity out of the east coast market and to facilitate a changed supply chain that delivers efficiency as well as environmental outcomes.

At a practical, SA-specific level, it now emerges that the State’s network operator, ElectraNet, has been in the throes of preparing a case for substantial outlays on the transmission system for its next bout on revenue determination with the Australian Energy Regulator. This bid will address investment from 2019 to 2023 and it is not hard to see the local body politic wanting such refurbishment to happen earlier than this.

The other augmentation issue given added impetus by the blackout is the call initiated by the Weatherill government after the July SA “energy crisis” for construction of a new interconnector between the State and New South Wales. (The SA Premier is probably not best pleased to have media pointing out that his Labor predecessor Mike Rann promised to pursue this link as long ago as 2002.)

Not surprisingly, the Australian Energy Council has weighed in today to argue that increased interconnection should be part of a considered national (or at least east coast) energy strategy “not a political response to a major blackout.”

While the South Australian situation is very high profile at present, the main political battlegrounds over pursuit of greater levels of renewable energy are Victoria and Queensland, each with Labor governments elected on a promise of going well beyond the RET.  Malcolm Turnbull is accusing Victoria’s Premier, Daniel Andrews, of being “evasive” about how his State target will be met while maintaining energy security and is, in return, is accused of “peddling ignorant rubbish.”

Turnbull (“I have a roof full of solar panels at home in Sydney”) declares he is “very keen” on renewable energy but “we have to maintain security and reliability and we have to maintain affordability” while reducing carbon emissions.

On cue, a Queensland minister has described the PM as “almost a climate denier.” Bizarre business as usual, then.

Personally, I’m struck by and outbreak of emoting in some parts of the media and elsewhere about “how can this (the blackout) happen in a first world country?”

We have a writer in the “Australian Financial Review” this past weekend declaring that the real political fall-out flows from “the basic expectation of most people that in a first world country like Australia their fridge isn’t rendered useless for an extended period of time.”

Given that the “Fin,” Fairfax Media generally, tabloid newspapers, radio shock jocks and television news broadcasts have tub-thumped some 500 times about network “gold-plating” since 2013 (see Google News), this is quite a statement.

Does the writer, and others who have gone down this path in the past few days, have any concept about the tens of billions of dollars that would be needed to materially reduce network exposure to weather – or that even undergrounding is not insurance against system failure (cf the Auckland blackout of 1998 when a grid-based blackout lasted 10 weeks)?

My files on Auckland include a crisis management business commentary making this point: “Despite the best of all possible intentions, it is simply impossible to avert all crises. This was well stated by Aristotle, who said it is very likely that something very unlikely will occur. Large technological failures and catastrophes often occur in areas outside the realm of well-established and tested knowledge.”  To put it another way, in life generally we are pretty well always dealing with the certainty of the unexpected; politicians at least should understand this.

Having a storm tear down sections of three different high voltage power lines comes under the heading of “unlikely” and how it is possible to protect a grid against such an eventuality at a cost consumers are willing to bear seems a point lost on the ranters.

Rather more material is the emerging line in the media asking whether, if the coal-burning plant at Port Augusta had not been forced to shut by market conditions, the impact of the blackout could have been lessened or avoided for Adelaide, home of most of the 1.7 million people shocked and inconvenienced by the sudden loss of power? Will the immediate survey of the disaster by the Australian Energy Market Operator look at this aspect?

Who ends up conducting a wider forensic examination of the lessons to be learned from South Australia’s twin woes remains to be seen – Xenephon for one wants it to be the Australian Energy Market Commission – but Labor (the governments of SA, Victoria and Queensland and the federal opposition) will be nervous about having a “driving without due care” attached to the bumper of their green electric vote-catching vehicle.

The federal Coalition is already hard at work trying to make this stick. Industry Minister Greg Hunt, in an op-ed in the “Australian Financial Review,” comments: “In Paris last December the SA Premier declared ‘We are running a big international experiment right now.’ Hmmm.”

He asserts that “the demonstrated inability of the SA electricity system to cope with major storms will now be a factor in whether businesses choose to invest there.”

Hunt argues that there are “three fundamental pillars” of electricity management: (1) ‘the country must continue to have reliable base load,” (2) each of SA, Victoria and Queensland must engage in integrated planning of their renewables expansion, and (3) “there must be a more integrated system of providing consumer and investment security,” which he claims means that the NEM States will have to consider new or upgraded interconnectors.

Energy security, he declares, has to be a key consideration in attracting investment for today and tomorrow. I wonder how many times this sentiment was expressed in his speeches and media interviews from 2013 until recently when he was serving as Environment Minister?