David Penberthy: The legacy of Mike Rann’s Earth Hour vision risks turning off lights for SA
THE final phase of Mike Rann’s premiership was notable for three things: his passion for wind farms, his promise of an expanded Olympic Dam, and his denial of a relationship with a parliamentary barmaid.
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- SA faces years of power prices double other states
- Mike Rann’s crumbling legacy a year after leaving office
THE final phase of Mike Rann’s premiership was notable for three things. His stated passion for wind farms, his promise of a long-term relationship with BHP at an expanded Olympic Dam, and his denial of anything resembling passion or a relationship with a parliamentary barmaid.
Six years on and there is growing evidence that the one thing Mike Rann definitely did screw at the end of his reign was the South Australian power industry. That is the real scandal, not some alleged dalliance down at the golf course, but the compromising of our state’s energy security in the pursuit of faddish gesture politics.
The clamour over renewables might go down a treat in a Brompton share house with posters of Kakadu pinned to the dunny door. We are now getting a clear picture of what it means for everyone else.
The seemingly inevitable closure of an entire town, Leigh Creek. A comparable existential crisis in both Port Augusta and Whyalla. Sudden and unsustainable across-the-board hikes in electricity prices for business. Inflated bills for the rest of us.
The demeaning spectre of the State Government hitting the phones to scrounge around for power from elsewhere, jump-starting a mothballed gas power station, incapable as we now are of meeting our own needs.
Rann’s two big 2010 boasts, of a sustainable wind-fuelled future and an expanded Olympic Dam, have been proven incapable of coexisting. He was making two contradictory promises at the same time, and it’s a great pity that no one twigged to it.
The unreliability of wind and solar power means BHP is now not confident of being able to operate at its current levels, let alone meet the energy demand of an expanded Olympic Dam. An expanded Olympic Dam now looks like the stuff of fantasy.
It might be the world’s largest uranium deposit, rich also in copper and gold, but you simply can’t get the stuff out of the ground if you have a power supply that falls over when the wind stops blowing or the sun doesn’t shine brightly enough.
At a time of entrenched high unemployment, when old-style manufacturing businesses are vanishing and allied industries struggling to stay afloat, it is a genuine crisis that SA can no longer guarantee its own power supply.
The worst thing is it is the talk of the big end of town in the eastern states, the subject of scathing editorials in The Australian Financial Review and aggressive commentary in The Australian, publications read by managing directors and CEOs who are now marvelling at the fact that power in SA costs four times what it does in Victoria, and asking why anyone would want to do business here.
You have to wonder in hindsight whether there was any hard-headed economic modelling drawn up around the Rann vision of a wind-fuelled future. It seems that genuine economic rigour was shunted aside by a feel-good determination to lift the load on mother Earth.
I am not sure how microscopically small our contribution has been in terms of reducing global emissions. You would suspect it is effectively irrelevant in the scheme of things, given China and India build a coal-fired power station every month to cope with the demands of their burgeoning, energy-hungry middle classes.
Renewables advocates would reject such an assertion as defeatist, and argue that the surest way to destroy the planet is for everyone to wait for someone else to move first. Yet in our determination not to destroy the planet, we risk destroying both our standard of living and our economy.
The issues in the power industry are often described as complicated. Certainly, there are several factors at play, such as colder-than-normal weather, our geographic isolation and vastness, and the lack of connectivity across the national grid.
But the key problem isn’t complicated at all. the Rand government treated the renewables industry like saints and the coal industry like sinners. Wind and solar were given such a leg-up through subsidies that coal could not compete.
At the same time, wind and solar have been proven incapable at this stage of generating the same amount of reliable and affordable power as coal did. So when we took coal out of the equation — as we did with the closure of Alinta’s Port Augusta coal station in May — we did not have enough electricity to go around.
Much of the logic behind the renewable business is perverse. One of the greatest achievements of the solar industry has been to let rich people save money off their bills. The upfront cost of going solar is too onerous for the poor, for pensioners, never an option for renters, rarely one for young homebuyers with house and land packages on the fringes of town.
It’s a bonanza for the middle classes, though, and will remain so until the upfront installation costs come down.
And now, as a result of price spikes caused by the unreliability of renewables, we have the bizarre situation where the State Government is crafting or seeking assistance packages for old-fashioned industries, whose viability faces the biggest threat from power prices driven up by its own renewable policies.
When the electricity contracts expired for business last month, a wrecking ball smashed through every commendable measure the Weatherill Government had unveiled in its past two budgets in terms of transactional and payroll taxation. It sent the worst possible signal to business about the sense of operating in such a high-cost power state.
If we cannot secure improved connectivity with the national power grid, as the State Government is trying to do, who knows what options we have, wedded as we currently are to Mike’s Earth Hour vision of a state that’s at real risk of permanently turning off the lights.