Daniel Wills: Solutions to SA’s power crisis hard to find

ANALYSIS: Premier Jay Weatherill has finally grasped the language of self-reliance, discarding a whinger mentality that has people seething in the dark. The electricity market is now so broken that governments must intervene.

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PREMIER Jay Weatherill has finally grasped the language of self-reliance, discarding a whinger mentality that has people seething in the dark.

The electricity market is now so broken that governments must intervene. How they do so could become a multi-billion dollar question.

Mr Weatherill’s mysterious promise today of a “dramatic” intervention into the electricity market aimed at delivering cheap, reliable and clean energy could mean anything.

It’s a fair guess that much of the state doesn’t care how it’s done, so long as it is.

When the simplistic party politics are put aside and the cheer squads for coal and wind farms put down their pompoms, the basic factors that have plunged the state into crisis are clear.

The most fundamental can’t be fixed unless someone invents a time machine.

The national electricity market works like any other. It uses price signals and the promise of profit to deliver a certain outcome.

However, it was invented at a time when the perils of climate change were unclear and was designed with the assumption all power is reliable.

Today, we want our electricity to do several things.

As well as keeping the lights on and bills as low as possible, we also demand it do so in a way that won’t also put us under water.

The destruction of a carbon price in Australia means there is no efficient incentive for clean power.

Instead, we have direct payments to renewables to produce power whenever they can and regardless of whether it’s needed.

That has completely collapsed the business model of old, unsubsidised generators like the Port Augusta power station and helped speed their exit.

When the wind doesn’t blow, in this new environment, the lights are more likely to go off.

Mr Weatherill today conceded there is a major problem with the state’s energy mix.

He said the large uptake of wind farms, and how they were funded by the Federal Government, was making it harder for a relatively clean and reliable supply in gas to earn a buck.

There is compelling criticism of the State Government that it should have gone slower on the uptake of wind farms, and not make it so easy to get a planning approval.

Like uranium mining at Arkaroola, the Government can decide to stop investment if there is a clear public interest.

The solutions from here are extremely hard to find.

In an environment where the Federal Government refuses to examine a carbon price or emissions intensity scheme, but the state has raced ahead on renewables, SA appears to sit in the worst of all worlds.

Markets only work when they exist to serve people. This one has completely failed.

Where there is market collapse, especially where it is posing huge financial costs and social risk, even the most hard-headed economic rationalist can tolerate government intervention.

What Mr Weatherill does now is anyone’s guess.

Already on the table is a plan to buy the Government’s energy in bulk. This could lead to the building of a new gas-fired power plant. That would deliver much-needed new supply.

Suggestions of completely leaving the national market are fanciful.

The state, on a hot day, gets close to a third of its power from Victoria. If we go it alone, we’ll be doing so in the dark.

The Government may decide to operate its own baseload power plant.

Such a move is fraught with peril.

By acting in the current market for a social aim, rather than playing by the rules of profit and loss, it could completely upset the balance. At the very least, it would cost a bomb.

The Government may be able to do something under its own powers of regulation.

Without help from the Federal Government, that may just lead to more uncertainty and damage the hopes of new investment in the long-term when the legal environment is so unclear.

In the long run, many experts have their fingers crossed for large-scale industrial batteries that can capture wind power when turbines are running and pump it out when they’re not.

For the home survivalist, solar panels and small batteries may not be far away.

But, politically, the Government needs a fast fix.

This time next year, Mr Weatherill will be heading into a state election.

In all likelihood, the state’s power network will only be even more fragile. Victoria’s Hazelwood power station will shut, and there are fears for the viability of SA’s ageing Torrens Island plant, which is on its last legs and half of which was planned for mothballing last year.

But, finally, Mr Weatherill has publicly admitted that the cavalry is not coming.

He channelled public anger, declaring the latest chapter in the power crisis “totally and utterly unacceptable”, one which “didn’t need to happen” and said the state was right to be furious.

“We have to step up and take control of our own future,” Mr Weatherill said.

“The SA Government has been planning to intervene dramatically in the SA electricity market.

“The events of last night only confirm in our minds the need to take this dramatic step.”

The state is sick of the blame game and just wants a solution. We wait, and hold a candle.