Energy crisis boosts case for renewables, top policy adviser says

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Energy crisis boosts case for renewables, top policy adviser says

By David Crowe and Mike Foley

The crisis in the energy market has strengthened the case for Australia to reduce its reliance on gas and coal in favour of renewables, the nation’s peak energy regulator has declared in a warning about the exposure to soaring global prices for fossil fuels.

Energy Security Board chair Anna Collyer said the pressure on the electricity grid highlighted the need for reform to move “beyond the crisis” by continuing the long-term shift to solar, wind, hydro and other renewable power.

Australia heavily relies on gas and coal but is shifting towards renewables.

Australia heavily relies on gas and coal but is shifting towards renewables.Credit:Getty

With households being urged to turn off non-essential items to ease pressure on the grid, the immediate challenge for the energy market is to shore up supplies from generators using gas and coal to ward off the risk of widespread blackouts and targeted shutdowns.

In a sign of confidence that more power is coming online, the Australian Energy Market Operator (AEMO) said its suspension of the national electricity market on Wednesday – the first move of its kind in 20 years – had delivered “significant improvements” to the grid.

Energy Minister Chris Bowen said households should prepare for “significant pressure” on supply in NSW at night but the government was trying to prevent any “load shedding” that would force customers to go without electricity.

“We are confident we can avoid blackouts. We will work hard to avoid load shedding,” he said.

Anna Collyer, chair of the Energy Security Board, said the energy crisis showed the need for reform.

Anna Collyer, chair of the Energy Security Board, said the energy crisis showed the need for reform.Credit:Oscar Colman

Speaking to The Sydney Morning Herald and The Age about the reform plan out of the winter crisis, Collyer said the federal government’s plan to invest heavily in the transmission grid to support renewable power generators was crucial to reduce the impact of high global prices for fossil fuels.

“[The reform] actually helps us to address at least one of the causes of the current situation, which is a reliance on a commodity that’s subject to global pricing, which is both gas and coal,” she said.

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“That is a way we would move beyond the crisis over that longer term.

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“The reforms are very much around ... making sure that we transition in a way that has the least disruption for customers.”

AEMO has placed the national electricity grid under central control by suspending the market used by generators and retailers to govern supply and price, directing companies to produce the energy needed at a time when about one-quarter of the coal-fired power generation on the east coast is out of action.

“With the suspension in place, we’ve been able to work with market participants to manage electricity supply more effectively to meet expected demand,” AEMO chief executive Daniel Westerman said.

“Despite improved visibility of which generators are available and when, as well as more generation becoming available, it’s still too early to say when the market will resume normal operations.”

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Late on Thursday, official data showed coal-fired power generators were providing 55 per cent of the electricity in the east-coast grid while 18 per cent came from hydro and 7 per cent came from wind.

The AEMO figures showed 19 per cent of the supply was coming from gas-fired generators, a dramatic increase from the usual level of less than 10 per cent, indicating the amount of coal-fired power missing from the grid.

Resources Minister Madeleine King is talking to gas companies to encourage them to increase supplies to the local market or face tougher regulation using the gas “trigger” that could force them to redirect some export shipments to Australian customers.

Collyer’s predecessor at the Energy Security Board, Kerry Schott, said problems at the Loy Yang coal-fired power station in Victoria were likely to continue until September but the Bayswater power station in NSW could fix its problems in the weeks ahead.

“There will be capacity coming back,” said Schott, who stood down as chair of the board in October after four years in the post.

“[The reform] helps us to address at least one of the causes of the situation, which is a reliance on [gas and coal] that are subject to global pricing.”

Energy Security Board chair Anna Collyer

“The fact that we have so many coal-fired generators out of action is, frankly, not surprising because they are getting older.

“The thing we could not have expected was the flooding.”

The floods earlier this year damaged power generators in Queensland and NSW, requiring polluted water to be pumped out of facilities. About one-quarter of the coal-fired power generation on the east coast is out of action.

Illustration

Illustration Credit:Matt Golding

Schott, a business chief in the infrastructure sector for decades, told The Sydney Morning Herald and The Age that the solution would require continued reliable supply of gas to power generators while the country shifted to renewable power.

“In the longer term, the back-up for renewable power has got to come from gas until we get to hydrogen,” she said.

“And it’s got to come from hydro power. We need the link across the Tasman.”

Snowy Hydro originally planned to supply additional power from its Snowy 2.0 project from 2026 but has delayed this until 2028, while there is no date set for the Marinus Link that would cross the Bass Strait and free up the supply of hydro power to the mainland.

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clarification

This article has been updated to correct setting of the Marinus Link. It would cross Bass Strait not the Tasman.

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