July 30th 2016


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Articles from this issue:

COVER STORY Success of sex-change surgery a propaganda lie

CANBERRA OBSERVED Add two to cabinet as a conservative estimate

GENDER WARS Safe Schools provokes personal pronoun furore

ELECTION ROUNDUP Captain Titanic shuffles deck chairs

EDITORIAL Why court rules against Beijing on South China Sea

VICTORIA Turnbull must move to douse CFA dispute

ENVIRONMENT Wind, solar push up SA electricity prices

EUTHANASIA

AUSTRALIAN HISTORY Dr John Burton - public servant and Soviet agent

U.S. HISTORY AND POLITICS Is Trump long-awaited successor to Huey Long?

MUSIC A medium whose meaning is hidden from words

CINEMA No man on the mean roads of the Outback: Goldstone

BOOK REVIEW A significant first novel

BOOK REVIEW A certain rottenness in the state of Victoria

LETTERS

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ENVIRONMENT
Wind, solar push up SA electricity prices


by Peter Westmore

News Weekly, July 30, 2016

Since the Labor Government in South Australia took the state on the road to a renewable energy future some 10 years ago, installed capacity has grown from zero to more than 1,200 megawatts (MW) in wind and 400MW in rooftop solar. As a result, in 2012–13, over 30 per cent of electricity generated in the state was sourced from wind and solar energy. 

Northern Power Station, Port Augusta.

The target of 33 per cent of renewable energy was reached in 2014, six years ahead of schedule, so the target was increased to 50 per cent by 2025.

All this has been welcomed by the ALP and the Greens as the wave of the future, with the Greens calling for 100 per cent of all energy across Australia to be produced from renewables.

The downside of South Australia’s headlong rush into unreliable renewable energy is now becoming clearer, both to the people of South Australia and its businesses.

The priority given to purchases of renewable energy over fossil-fuel power has made generation of base-load power uneconomic, as base-load power stations need to run 24/seven to generate sufficient income to remain afloat.

Closures

The low-cost black-coal mine at Leigh Creek, 600 kilometres north of Adelaide, was the first casualty, with the loss of hundreds of jobs in the mine, and the closure of the Port Augusta power stations which used the coal from Leigh Creek.

These power stations produced 760MW of electricity, a third of the state’s electricity capacity. The result is that South Australia is no longer capable of generating enough electricity for its own purposes, and has been forced to import electricity from the (coal-fired) power stations in Victoria, at enormous expense.

Since the deregulation of the Australian electricity market, the price of electricity has been determined by competitive bidding in the National Electricity Market, which is managed by the Australian Energy Market Operator (AEMO), established in 2009.

AEMO was established to provide an open and transparent entity for both energy producers and consumers, to encourage the most efficient use of Australia’s energy resources. On its website, it publishes the real-time electricity prices in each state, and also produces reports on the state of the electricity market in each state.

The figures show that because of its energy deficiency, electricity prices in South Australia are consistently higher than in any other state around Australia, typically 50 per cent higher, but in extreme cases, up to four times more.

The high price of electricity in South Australia has had serious implications for heavy industry, including the motor industry and the Olympic Dam mine, which is connected to the SA power grid.

The high price of electricity, together with low metal prices, have contributed to the deferral of the expansion of the BHP Billiton-owned Olympic Dam mine, which is the largest in South Australia.

According to a recent article in The Australian Financial Review, electricity contracts for delivery over the next two years are being set at 9¢ to 10¢ per kilowatt/hour, compared with 5¢ to 6¢/kWh in Victoria, which provides back-up power for South Australia from its coal-fired generators in the eastern part of the state.

Wholesale prices for electricity in SA averaged 36¢/kWh in July this year, one of the coldest months, compared with 8¢ to 9¢/kWh in NSW and Victoria. (AFR, July 15, 2016)

When one looks at the SA Government’s websites, it is difficult to find information on the Government’s response to the state’s power crisis – although there are whole websites devoted to the state’s expanding renewable energy industry, particularly solar and wind power.

Recently, the state’s power problems were aggravated when the main connector to the Victorian power grid went offline for a long-planned upgrade. The result was that power prices in South Australia soared to unsustainable levels. According to the SA Energy Minister, the wholesale price of electricity jumped as high as $14/kWh, due to the shortage of power.

To fix the immediate crisis, the minister said he had taken the “extraordinary step” of asking a private energy company to reopen a gas-fired power plant, mothballed because it had become uneconomical, to supply an additional 239MW into the grid for a short time.

He said: “This is another example of the failure of the so-called national energy market.

“A confluence of remarkable events has led to incredible volatility in the spot market over recent days, which has resulted in higher electricity prices and put pressure on South Australian businesses, some of which have raised their concerns with me.

“Due to the privatisation of the state’s electricity assets, there is very little the state can do to ameliorate the price volatility.

“However, the Government is doing what it can to try and protect these businesses and stabilise energy prices during this period.”

While the SA government pretends that the problem is temporary and can be overcome through increased use of renewable energy, one large user told the AFR that South Australia was just seeing the start of its difficulties.




























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