Archive for October, 2016

A few simple tweaks?

After sifting through a small mountain of news and views in the past few days ahead of writing the November issue of Coolibah Commentary, and also ahead of co-chairing the “Re-powering New South Wales” conference in Sydney this week, I have come to the conclusion that the coconut for the most sensible, laymen-friendly comment on the South Australian saga should go to my friend Tim Nelson.

He is AGL Energy’s head of economics, policy and sustainability and also an adjunct associate professor at Griffith University. In a personal view, he sums up the post-blackout debate like this (my paraphrase): It’s too early to talk definitively about “causes” given the complex nature of the electricity system –- and the “renewables versus conventional” tone of the public shouting match is not the issue. When you boil it all down, the key issue is that, by 2030, given our national commitment to carbon abatement, the east coast electricity market as a whole will need to have a similar emissions intensity to that of South Australia today.

Nelson opines that, if left to market forces alone, the transition “will be disorderly.”

He (rightly in my view) adds that there is a “unique opportunity” for Chief Scientist Alan Finkel (and his still unnamed associates) to recommend a reshaping of national energy policy to “resolve the trilemma of security, competitiveness and reduced emissions.”

While South Australia may be in the spotlight still, with Victoria’s and Queensland’s renewables-happy governments bobbing in and out of the media and political footlights, the biggest stage for the playing out of this drama remains NSW – with three million residential customers, 300,000 businesses, more than 60,000 gigawatt hours of annual consumption and 10,000 megawatts of black coal generation.

What the power future holds for the “premier State” is not only the focus of this week’s “Re-powering NSW” forum but also of a symposium being staged on 8 November by the Energy Policy Institute and the Academy of Technological Sciences & Engineering on “Beyond coal: what will power NSW?”

Central to both events is one question: how rapidly can low-emission technologies displace existing (and ageing) coal generation in NSW and what are the technical challenges in integrating them in to the State’s power system?

It should be mentioned here that the Coalition government in NSW is out and about asserting that “security, reliability and affordability of supply” is at the core of its energy policy and that “strengthening the diversity of supply” is critical to success in this endeavor. State Energy Minister Anthony Roberts says that the NEM framework, the functions of the CoAG Energy Council and the rule-change process are all designed for the past’s incremental changes and are not coping with the “rapid evolution” of today.

Roberts, like his counter-parts in South Australia and Tasmania (and perhaps in the federal government?), is keen on more high voltage interconnection. Nelson (in the above-mentioned personal perspective) cautions politicians to be careful about charging down this route “because regulated assets lock in long-term costs for consumers.”

In Nelson’s view, “a few simple policy tweaks” – generator closure rules, stapling “firm” capacity to renewable investment policies and a cautious approach to network infrastructure spending – could be the way to provide better consumer and community outcomes and a better climate for investors.

In this context, it is interesting to see the AGL Energy chairman, Jerry Maycock, speaking at the company’s recent AGM, calling for three key policy steps:

  • Orderly retirement of emissions-intensive power plant (of which his business owns more than a little), suggesting the age-based limitations on generation in Canada as an example.
  • Redesign of the NEM to value both firm capacity and energy, urging “new thinking” because, he says, a traditional capacity market is unlikely to be the answer.
  • Development of a “robust and nationally-consistent” approach to incentivizing new renewable generation.

The point at which a fair-sized raft of stakeholders will diverge from Maycock & Co, I suggest, is the last one – and both the “Re-powering” and EPIA/ATSE forums are going to see presenters speaking out for consideration of the merits of nuclear energy, gas generation and new-technology coal power in the electricity future of NSW (and more broadly across Australia). This is the “fuel neutral” approach that still seems to bounce off governments, would-be governments and media hounds alike.

EPIA, in promoting the November forum, suggests that the “investment challenge” for NSW between now and 2030 could be of the order of $70 billion, which is not a small sum even if you say it quickly.

Getting the real elements of this challenge in to the public debate regrettably seems a Sisyphean task (as in extremely effortful and, to date at least, futile), not least because of what I see a high profile academic commentator (in the current issue of the “Weekend Australian”) describing in these terms: “Rushing to judgment is something the entire political class now does, egged on by a media culture built on rapid change and moving parts that create good theatre.”  This is true, but not a reason for discontinuing efforts to roll the rock of energy strategy up the hill as this week’s conference and the November 8 symposium will once again set out to do.

The bottom line in NSW is that the generation mix in the State today is 79 per cent coal, seven per cent gas and 14 per cent renewables. Of the latter, 32 per cent is provided by Snowy Hydro and seven per cent by small-scale hydro plants, with wind accountable for 18 per cent, solar 32 per cent and bio-energy 11 per cent.  Shifting from here towards a market that overall has the same generation emissions intensity as does South Australia today is a huge task that (the SA experience seems to indicate) can only too readily go wrong.

SA’s contribution to NEM supply (in gigawatt hours) is just 6.3 per cent compared with 32.6 per cent for NSW (and 26.7 per cent for Victoria or 27.8 per cent for Queensland).

I keep seeing South Australia referred to a “a canary down the coal mine” in this game. What does that make NSW? An ostrich?

It’s not magic

Coincidental with the publication of the Queensland government’s panel report on how a high State renewable energy target can be chased is another in London by the British energy regulator (Ofgem) that includes a statement highly relevant to the debate here: “In our view, typically the best way to get the best deal for consumers (and competitiveness for industry) is likely to be to tackle key externalities and let market dynamics drive decisions where possible.”

In the same vein, this time emanating from Oxford, is a new commentary by Dieter Helm, the British Treasury’s favourite energy economist, in which he excoriates the European approach to energy and climate policy as “a marriage of two different and often-conflicting objectives: to promote and enhance competitive energy markets, which are technologically neutral, and to promote the climate agenda in a deliberately technologically biased way, outside and separate from the competitive markets.”

Helm condemns the European Union’s 2030 renewables plan as “a dog’s dinner.”

For those here who think, to quote them, “we are on the cusp of a revolutionary global paradigm shift towards renewable energy,” the EU path represents the yellow brick road and they, including the Victorian, ACT and Queensland governments, are in a rush to push Australia down it.

Queensland Energy Minister Mark Bailey believes the draft report he has just published on pursuit of his government’s target of a 50 per cent renewables target is a “breakthrough” development, asserting (with an eye on the recent flurry of CoAG Energy Council activity after the South Australian blackout and of the Alan Finkel report that he and other ministers have just commissioned) that it shows his State can develop its grand plan “while maintaining electricity security and reliability over the next 14 years.”

In the light of recent events, that is potentially what Sir Humphrey (of “Yes Minister” fame) would describe as a “courageous” stance.

Certainly the Australian Energy Council, representing generators and retailers, is not impressed.

CEO Matthew Warren declares that transforming the Queensland system will requires a multi-billion dollar investment over decades that will have to be paid for by the State’s consumers or taxpayers. “It’s not magic,” he says.

Warren warns that the approach proposed in the draft report to grease the wheels of a forced transition to wind and solar power will “dull price signals” in the Queensland sub-market that are needed to flag to owners and developers of both thermal and renewable generation where and when to build new plant.

The draft report, he adds, expects a high level of renewable generation to be approximately cost-neutral to Queensland consumers if all existing coal and gas power stations operate at reduced margins. Given that the State government owns two-thirds of Queensland generation, this would transfer the true transition cost to its taxpayers.

For the Energy Networks Association, the report just highlights the importance of a national approach to carbon and energy policy.

CEO John Bradley notes that the Palaszczuk government is focusing on just one policy option – variable renewable energy – and he challenges the panel and the politicians to dwell on the right question: which he says is what is the cheapest way to reduce carbon emissions while keeping the lights on?

Bradley points to work recently by the federal Climate Change Authority, using the same consultants as the panel, Jacobs, that found technology-specific targets result in higher-cost carbon abatement. Like AEC, ENA wants a national policy on cleaner energy to be pursued with clear abatement targets. That way, Bradley argues, “consumers will pay less and energy security can be better managed.”

The government panel says in its executive summary that “significant (State) policy action will be required to reach the 50 per cent target,” with between 4,000 and 5,000 megawatts of new large-scale generation capacity needed to be developed in Queensland between 2020 and 2030.

The government intends to launch legislation to give effect to its scheme in 2017. By then, apart from CoAG having received the Finkel review (at least the interim report), Palaszczuk & Co will have had to release the Queensland productivity Commission report on electricity pricing. This was handed to the government at the end of May and must be made public by December.

The draft QPC report was published in February this year and told the government “in order to achieve least-cost carbon abatement, (it) should work with the COAG Energy Council to find opportunities for collaboration on carbon policy, as an alternative to pursuing independent action.”

The QPC observed (seven months before the South Australian twin events) that “one of the challenges for governments at the national and State level is to provide a clear framework for lower emissions generation in a way that supports the market to make the transition to the delivery of reliable and cost efficient electricity supply.”

Modelling done for the commission found that the introduction of a QRET would require 37,250 GWh of renewables generation annually by 2030. The target would need to be primarily met by around 19,000 GWh of additional large scale renewables generation, an increase of about 17,600 GWh over 2015 — and would require a subsidy of some $8.6 billion.

In the interests of transparency, State Treasurer Curtis Pitt should release the QPC final report now that his government is waving around the draft renewables panel document.

Its LNP political opponents argue that the numbers in the new document are “a fudge.”

Meanwhile, in Parliament House, Canberra, this week, Prime Minister Turnbull (in Question Time) accused Labor of treating renewable energy as an ideological issue rather than a technological one. “We must stop putting ideology in to something that is essentially an engineering issue,” he said.

All of which underscores that what we have here – and not just in Queensland – is a “dog’s dinner,” as Dieter Helm asserts.

How exactly the Finkel report and further CoAG discussion can deliver a path to the approach advocated by Ofgem (and others) is one of the biggest national questions.

A path down the mountain

In the context of the past fortnight’s hubbub over wind-struck South Australia and its ensuing electricity woes, it’s more than a little interesting to read a report in the “Wall Street Journal” about how Hurricane Matthew is “stress-testing a costly effort by utilities and the US government to make the electric grid more storm-resistant.”

According to the paper, the bill for smart grid and storm-hardening technology in America from 2008 to 2017 will amount to $US32 billion ($US7 billion of which has been spent in Florida and the Carolinas, which have borne the brunt of Matthew’s force). The purpose of this exercise is to make the grid more resistant to wind, flying debris and floods as well as to enable power providers to identify damage and restore service more quickly.

The Obama administration has contributed $US4.5 billion to the cost through a bill passed by Congress in 2009, part of the post-GFC stimulus package. (One may recall en passant that Kevin Rudd’s regime chose to spend money inefficiently on pink batt insulation.)

The overall US outlay has included provision of 65 million smart (digital) meters, almost a third of the American total, as well as equipment that automatically isolates problems and re-routes electricity flow around trouble spots.

As it happens, 2009 was roughly when the Australian federal and east coast governments were looking at network resilience and facilitating the regulator allowing $35 billion to be spent on the east coast grid. Did the policymakers and their advisers also look at what the Americans were up to and consider a similar approach here? Manifestly not.

As I have pointed out previously, it’s pretty hard to hold off Nature when it comes to weather-proofing the system. More than two million households and businesses lost supply in Florida and the Carolinas per kind favor of Matthew – although 901,000 of 957,000 Florida Power & Light customers had service restored within 24 hours. (Let’s not forget that the same was done for some 750,000 South Australian customers.)

The focus in these situations inevitably falls not on fast recovery but on the thousands stranded without supply for days. Here the situation is similar in SA and Florida.

The broader American effort is directed not just on here-and-now utility resilience but also on the future.

The Obama administration announced in March that it is making $US220 million available over three years to research laboratories for innovation to make power grids “cleaner, more productive and more secure.”

Australia’s NEM is the world’s longest electricity system, but of course by no means the biggest; America, in effect, has three NEMs (interconnected state systems with much larger customer numbers) plus stand-alone Texas, delivering electricity from thousands of power plants to 150 million accountholders (our NEM has 9.4 million) via 3,300 utility businesses (less than 50 here).

One of the things we have in common is that a substantial part of these grids is made up of infrastructure and technology dating back to the 1970s and inevitably straining to meet growing service demand let alone the challenges of a transition involving increasing levels of variable renewable energy.

Whether one believes that climate change is the cause or not, it’s a fact that significant weather events are more frequent at this time and an important factor in grid management today. In the case of the US, there are now 70 to 130 major outages a year related to weather, reportedly a lot more than in the 1980s and 1990s.

The full cost of making grids much more resilient is eye-watering (and wallet weakening, a significant political issue in Australia these days, as we all know).

The Electric Power Research Institute in Palo Alto, California, puts the cost for the US alone at somewhere between $US338 billion and $US476 billion. It also estimates the American economic benefits of pursuing these outlays at up to $US2 trillion.

The US Secretary for Energy, Ernest Moniz, says Florida P&L is on the cutting edge of “addressing a grid for the 21st century, particularly in the area of resilience.”

Which, for me, resonates with a point I made in my previous post, in which I asked what the CoAG Energy Council is really asking Alan Finkel to do in his review after the SA blackout political (and media) shenanigans?

Reading various local commentaries over the past few days, I have the impression that the Chief Scientist is being tasked as a modern Moses, expected to return from Mount Hyperbole with tablets to solve all our energy transition ills.

It might, from where I am sitting, be bold of him to instead come back and say “I got this gig because the body politic (and the media) had kittens about SA being blacked out; here is what is needed to address this issue for Australian grids.”

In this respect, a trip to Florida might be a good starting point, with a stop-over in Washington DC for a chat with the estimable Moniz, former MIT professor of physics and Obama’s Energy Secretary since 2013, in which role he has been a stand-out among the world’s current crop of energy portfolio holders.

“Modernizing the electrical grid is essential to reducing carbon emissions, creating safeguards against attacks on our infrastructure and keeping the lights on,” Moniz said recently.

Perhaps, in a nutshell, this is the key message Finkel (and his yet-to-be-announced pair of review colleagues) need to deliver to Frydenberg and the Energy Council (and beyond them to Turnbull and other leaders) even if it leaves numerous of the local energy chattering class in an ongoing froth.

Could be the beginning

What exactly is the Australian Chief Scientist, Alan Finkel, being asked to do?

It is an important question in the immediate wake of the CoAG Energy Council decision on Friday to enlist him and two as-yet unnamed co-investigators to produce, says “The Guardian” newspaper, “an energy security review determining whether the national electricity market can deliver reliable base load power while meeting Australia’s climate change commitments.”

According to the “Australian Financial Review,” the Finkel panel is “charged with devising a plan to ensure future energy security, affordability and sustainability as more renewable energy comes into the electricity system and more coal-fired power stations close.”

What the CoAG communiqué says is that, “given the critical importance of energy security, reliability and system resilience,” Finkel’s panel will undertake a “wider independent review to take stock of the current state of the security and reliability of the national electricity market and provide advice to governments on a coordinated, national reform blueprint.”

The terms of reference set out for Finkel require his panel to deliver a “blueprint (that) will outline national policy, legislative and rule changes required to maintain the security, reliability and affordability of the NEM in light of the transition taking place.”

The review, the ministers say, will draw together and build on the analysis and findings of the following “recent and ongoing work streams:”

• Reviews into the South Australian ‘system black’ event by AEMO, AER and the AEMC

• Detailed analysis and reports by AEMO and the AEMC into future power system security and market frameworks

• Analysis by AEMO and the AEMC into the impact of carbon mitigation policies at both the Federal and State level on energy markets

• A review of governance arrangements (Vertigan review)

• National Gas market reforms which relate to NEM security, reliability and affordability; and

• A review of the appropriateness of existing regulatory arrangements for interconnector investment.

And, if this is not enough, the Energy Council also requires that, “consistent with the national electricity objective, the review will examine the costs and benefits, including to consumers and industry, of the options to address any current or future vulnerabilities identified in the NEM.”

All of this is to be done, in draft, to be available when Malcolm Turnbull convenes the next CoAG leaders’ meeting in December and to be completed early in the new year.

That’s right, this report is going, via the Energy Council, to the top of our nine governments.

To quote the Grattan Institute’s Tony Wood, writing in “The Conversation,” Finkel & Co are “challenged with steering Australia’s energy system around some big potholes while keeping an eye on the horizon — and all in about six months.”

Lost in the fog of jaw following the Energy Council gathering on Friday is another ministerial requirement – this one for the Australian Energy Market Operator to provide two reports a year on “the implications on security and reliability of current and proposed investment in the national electricity market.”

Looking at all this from the political angle, Phil Coorey, the chief political reporter of the “Australian Financial Review,” takes the view that the Energy Council outcome is an advance “if only because it promises a co-ordinated approach and reduces the danger that, among the hue and cry fuelled by vested interests on both sides, short-sighted and regrettable decisions could again be made.”

Of course, by the time the Finkel report is completed and the federal government has carried out its pledged review of Australia’s climate change goals in 2017, we will be nearing this time next year – and I bet you a dollar to a doughnut that talk of the next federal election by then will have reached a new high.

Moreover, the next South Australian election will be held on 17 March 2017 and electricity is a very likely hot topic in that campaign. (The Victorian election, by the way, is scheduled for 24 November 2018.)

All of which once again underlines that energy conflated with carbon abatement is a very political issue.

In which context I was struck this week by these comments in the Adelaide Web newspaper “InDaily” by its editor, David Washington, commenting on the broad issues of the blackout: “Politics has become so ideologically-hidebound, so combative,” he wrote, “that our political leadership seems to have lost the capacity to think clearly, to formulate practical solutions, gain public support and implement them. “It’s difficult to ignore a conclusion that members of our political class no longer pay heed to facts – rather, they prefer to cherrypick fact-like pieces of information to suit their particular ideology or political purpose.”

There-in lies the worm in the apple: the Australian Chief Scientist is widely respected and clearly regarded by the energy ministers (and their leaders) as a safe pair of hands. Opting for the Finkel panel approach gives the whole political crew a breathing space – an equally gives the energy agitators months more to play their games – but eventually it all comes back to governments and, in the eyes of leading commentators, the federal government in particular.

Waiting for a Boy’s Own comic moment – with one bound Jack was free – in which a complex and currently seemingly impossible situation can be resolved by the simplest possible means relies too much on hope rather than our experiences.

However, industry is clearly ready to live in hope, as evidenced by comments from Malcolm Roberts, CEO of the Australian Petroleum Production & Exploration Association.

“Let’s hope Finkel’s review will drag debate away from polarized positions,” he says, “to a fact-based discussion of how Australia can cut emissions from the energy sector without jeopardizing reliable, affordable electricity for consumers. As far as some governments are concerned, this might not be the beginning of a beautiful friendship, but it could be the beginning of a long overdue realism in debate about renewable energy.”

Talking up the need for a mix of technologies to meet national power needs, Roberts adds: “As a starting point we need to see more co-ordinated action from governments and fewer ad hoc announcements designed to capture headlines.”

Right on.

Looking for answers

If, to quote Jennifer Hewett of the “Australian Financial Review,” we are caught up in an energy revolution looking for answers, then the really important hunting ground is not South Australia or Tasmania, much in the headlines this year for crises, but the trio of Victoria, New South Wales and Queensland — home in 2015 to 174,580 gigawatts hours of power production (out of an east total of 195,346 GWh, ie 89 per cent) and to 8.3 million residential and 1.07 million business accountholders (88 per cent of the Australia-wide, grid-connected market).

Both Victoria and Queensland are getting their share of current headlines, per kind favor of the federal government badmouthing them over go-it-alone renewable energy targets, but the sleeper (at least in the public debate) is NSW, home to 3.5 million of the aforesaid residential and business accountholders, more than Victoria and South Australia put together, and to 62,000 GWh of electricity production, again almost as much as Victoria and SA combined.

The Baird government has initiated an “advanced energy strategy” project, which has flown below the public radar since its announcement at the beginning of August with its promise to develop yet another “roadmap” for a journey to a “clean, affordable and reliable” energy future for the State. Energy Minister Anthony Roberts has initiated discussions behind closed doors with “energy experts across the east coast of Australia” in pursuit of this roadmap and promises that the outcome will “ultimately” be made available for “broader comment and input.”

Quest Events and I are getting ahead of this game this month by staging a two-day public conference on “Re-powering NSW” in Sydney. (You can find the program here: http://www.questevents.com.au/re-powering-nsw-2016.) Speakers will include:
# Paul Italiano, chief executive of TransGrid
# Professor Ross Garnaut (on the opportunities and challenges for an energy transformation by 2035)
# Innes Willox, CEO of Australian Industry Group
# Professor Frank Jotzo of the Australian National University (on developing a market mechanism to facilitate the exit of high emissions generation)
# Tania Constable, chief executive of CO2CRC, on a role for CCS
# Paul Broad, CEO of Snowy Hydro (on building new infrastructure for secure and affordable energy supply)
# John Bradley, CEO of Energy Networks Association
# Miles George, CEO of Infigen Energy
# Iain MacGill, Director, Centre for Energy & Environmental Markets (on electricity storage)
# Kieran Donaghue, GM Policy of the Australian Energy Council (on the challenge of integrating renewables in the market)
# Greg Evans, Executive Director Coal of the Minerals Council of Australia (on developing a high efficiency, low-emissions roadmap for NSW).

One of the most popular, and from my perspective most useful, aspects of the “energy outlook” conferences on which Quest Events and I have worked for the past five years, is the “Q&A” sessions they feature, involving not just some of the speakers but also other players in the energy game and by no means least the audiences themselves.

The “Re-powering NSW” conference will include five such panel discussions, including one featuring Andrew Stock from the Climate Council, Innes Willox of Ai Group, Tony Maher of the CFMEU and Ivor Frischknecht of the Australian Renewable Energy Agency debating “Can we re-power NSW reliably at low cost?” — and another featuring Tim Nelson of AGL Energy, Lisa Gooding of EnergyAustralia and Anthony Englund of TransGrid on what NSW can learn from the SA developments in trying to phase out higher-emitting generation in the “premier State.”

There are also going to be panel discussions on the potential use of carbon capture in NSW (featuring Tania Constable of the CO2CRC, Alex Zapantis of the Global CCS Institute and Rick Fowler from the NSW Government — where he is director of coal innovation) and on achieving affordable supplies of gas for the State (where the panellists will include John Pierce, chairman of the Australian Energy Market Commission).

Another that should be rather interesting has the title “Is the death of the grid dead?”

My co-chair Andy Lloyd (chair of the Energy Policy Institute of Australia) particularly wants a focus on the vexed issue of investment and the conference will feature a presentation by Andrew Pickering, chairman of Infrastructure Capital Group, and then a Q&A involving him, Brett Redman, the chief financial officer of AGL Energy, and Gloria Chan of the Clean Energy Finance Corporation.

The vicissitudes of the federal Renewable Energy Target are a good reflection of that saying that you can lead a horse to water, but getting it to swim is another matter! The issue of whether market mechanisms are adequate to attract investment — and how much our penchant for chopping and changing the rules of the game deter investors — tends to get less attention (and not only for energy) than is sensible in a country like Australia.

For the purposes of this conference, the misfortunes of South Australia, the ensuing shouting match over renewable energy and then the “emergency” CoAG Energy Council meeting on Friday (with its decision to get Chief Scientist Alan Finkel to chair a “quickie”  review of energy security — his draft report has to be available by early December) are a commercial blessing, giving real-life emphasis to the event’s premise: an era in which coal generation has served the State well since the 1950s is moving to at very least change substantially, if not close, as the existing fleet, mostly built in the 1970s and 1980s, moves towards the end of its design working life and questions abound for the next 10-15 years, not just about what use can be made of variable  renewable energy (and how to integrate it in to the system) but also the extent to which gas and coal-burning plant can continue to play a role.

To which, of course, one must add that ignoring nuclear power in this environment is daft. One of the more interesting parts of the program, I think, is a pair of back-to-back presentations featuring Infigen Energy’s Miles George talking up the opportunities for large-scale wind development in the State and Tony Irwin, technical director of SMR Nuclear Technology, examining what forms of reactor power could be suitable for NSW.

I haven’t nearly covered the whole conference program in this post but I think what is here goes to support my own view that (a) it is highly desirable to have this broad-ranging discussion about the largest regional sub-market for power at this time (a view I formed well before the wheels fell off the SA cart) and (b) there’s a helluva lot more to this situation than political spinning and once-over-lightly media coverage has led the community at large to believe.

Storm-lashed

It is, I suppose, the reverse of a storm in a teacup.

In barely a week since a substantial storm lashed South Australia we have seen debate about electricity policy swing from relatively ho-hum engagement between the usual suspects to the headlines of the media nationwide, culminating in an “emergency meeting” of the CoAG Energy Council in Melbourne tomorrow.

What will flow from this gathering remains to be seen, but the flavor of events is well represented by “The Australian” this morning leading its front page with a headline that says “Malcolm Turnbull to put the wind up States over power blackouts”

Central to the CoAG Melbourne discussion is a hastily-prepared report on the South Australian blackout by the Australian Energy Market Operator, which has got more media attention than all the other output from the agency in its nine-year history. And, naturally, it is being interpreted by the many interested parties to suit their own perspectives.

The Australian Energy Council, rightly I think, is striving to get understanding that the AEMO report is only a start, more detailed analysis is needed to understand what occurred in SA last week and steps to improve power system security should wait on this work.

AEC’s Matthew Warren makes the salient point that we need to think differently about the potential effect of extreme weather events on electricity supply now that Australia is increasingly shifting to a more weather-dependent supply system; for the radical corner of this shouting match, of course, this sentiment, expressed by some others, too, in various forms, is seen as a wicked assault on the great goodness of wind energy.

Warren argues the report from AEMO – itself a preliminary effort rushed out to meet the politicians’ needs – indicates that a different mindset is required to properly run a decarbonizing electricity system “reflecting the significant differences between using conventional thermal generation and a mix with higher levels of intermittent renewables.”

It says something about the quality of strategic thinking about energy in this country that it takes the rough beast of a State-wide blackout to shatter the smug shuffle down the road to higher and higher levels of wind and solar power without due attention to the fact that safe, reliable, affordable power supply requires superior levels of engineering skills.

John Bradley of the Energy Networks Association sums things up well in declaring that we now have “political risk too great for the energy system.”

Speaking at an energy conference this week, Bradley commented that “patchwork targets and policies across Australia are not leading to a stable, secure energy system,” pointing out that Friday’s Melbourne gathering is the second “emergency meeting” of energy ministers in seven weeks.

I rather like his metaphor: we are “running with scissors” towards a lower-emissions energy system.

To all of this, Malcolm Roberts of the Australian Petroleum Production & Exploration Association adds a reminder of the importance of maintaining a diverse energy mix in ensuring power system stability and security.

He is alluding, of course, to the fact that shoving gas to the sidelines of electricity supply isn’t smart at all – and who can blame him for also seizing the opportunity to remind us that (a) gas generation played a key role along with the SA/Victoria main interconnector in restoring power quickly last week and (b) when the lights went out, “tens of thousands of SA families were still able to cook their dinners, heat their homes and enjoy warm showers thanks to natural gas.”

The Minerals Council of Australia takes this point still further, as its CEO, Brendan Pearson, writes today in an op-ed in “The Australian.”  MCA argues for “a simple, merit-based approach” to decarbonizing the national power supply. “No option should be off the table. No solution should be favored over others. We must ditch the canard that only renewable energy can deliver low-emissions solutions.”

Pearson accuses “some States” of wanting to phase out coal and gas, continuing to ban nuclear energy and pushing towards 50 per cent of their power mix from variable renewables “without any assessment of the cost or viability.”

This is my cue for harping yet again on the wisdom of paying proper attention to the advice of the SA royal commissioner Kevin Scarce, the more so when I see the Prime Minister saying this sort of thing: ““Let’s take this storm in South Australia as a real wake-up call. Let’s end the ideology and focus on clear renewable targets.”

This is my paraphrase of the royal commission’s comments on the general issue of our electricity transition:

# In developing Australia’s future electricity system there is a need to analyze the elements and operation of that system as a whole, and not any single element in isolation. It should be an objective of policymakers to ensure that those outcomes are delivered at lowest possible cost.

# There is a substantial challenge in meeting the three requirements of low carbon, high reliability and low cost. This transformation needs to be guided by stable medium- to long-term government policies to encourage investment.    Given the complexity of the issues and cost of transformation, planning must be based on evidence not opinion or emotion. That evidence should focus on a combination of cost, reliability and carbon intensity.  A future national electricity supply system must be designed to be low carbon and highly reliable at the lowest possible system cost. Resolving this ‘trilemma’ will be difficult and will require carefully considered government policies. A low-carbon electricity system would also need to maintain current levels of reliability.

# No single option for electricity generation currently commercially available in Australia meets all three criteria because of the intermittency of renewables, the emissions intensity of fossil fuel generation and the high capital costs of developing nuclear power.

# At present, there is no analysis of a future NEM that examines total system costs based on a range of credible low-carbon energy generation options. Such an analysis would be required before it could be asserted that any option would deliver reliable, low-carbon electricity at the lowest overall cost.

# The Commission recommends that the South Australian Government promote and collaborate on the development of a comprehensive national energy policy that enables all technologies, including nuclear, to contribute to a reliable, low-carbon electricity network at the lowest possible system cost.

If the ministers meeting tomorrow, and the PM and first ministers of the States and Territories beyond them, could just focus their attention on this good advice, some real progress could be made. At the very least, if they don’t, they owe the rest of us an explanation of why not.

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 an 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” sticker attached to the bumper of their green electric vote-catching vehicle.

The federal Coalition is already hard at work trying to make this happen. 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?