Robert Gottliebsen: a plan to avoid a power crisis

Australia’s power emergency has been caused by political incompetence.

The national emergency set to be created by the Australian power and energy crisis is only just becoming apparent.

It is the most serious peacetime issue this country has faced since the depression.

The commonwealth government has started to tackle gas but they have yet to take action on electricity.

I have privately consulted with a number of best energy experts in Australia so, with their help, today I want to put forward a three-part solution.

As I pointed out yesterday, power prices are set to double and gas prices will rise substantially over the next 12 to 18 months. Blackouts in New South Wales and Victoria will take place on hot days when there is no wind (that is usually about 10 — 15 days a year).

Without action from the government shortages of gas are possible in coming months but are certain for the winters of 2018 and 2019.

Australia’s employment industries will be ravaged and vast amounts of consumer discretionary spending will be diverted to energy from other sources.

This emergency has been caused by political incompetence in Victoria, New South Wales and to a lesser extent Canberra. There is no simple solution but the three basic actions I map out will prevent a national disaster.

Step one: Nothing can happen to substantially reduce the crisis without the politicians being prepared to stop misleading the public and tell the communities the truth.

Once the community understands the problem from their leaders I believe that Australians will all participate in the solutions. But while the truth is concealed it is very difficult to take short or long term actions.

Politicians need to be aware that any statements they make from this weekend onwards that claim there is no crisis will be tested against what will take place.

If there are blackouts I suspect the enraged community will demand that legal action be taken personally against the politicians and public servants, which naturally they will defend in the courts. The 1995 legislation provides for them to be jailed for a year if they make misleading statements. As of this weekend, politicians are now put on notice. I fear that rather than tell the truth, most NSW and Victorian politicians will punt that we have a mild summer where the wind blows or that there will be an equipment failure next summer that they can falsely blame.

Step two: The short term plan.

The experts’ short-term plan is designed to limit blackouts and with a bit of luck might even avoid them.

Both New South Wales and Victoria must follow South Australia and install extensive diesel generation. But the two largest states can and must go further.

Many of our large companies including telecommunications groups, banks, accountancy firms and industrial complexes have extensive generation back-up capacity. Currently their plan is that if there is a sudden blackout they will quickly switch on their power generators and there is limited damage.

With two or three days notice we can usually predict the looming hot summer days without wind and so we will know when we face blackouts.

We should incentivise those with emergency capacity to switch on their power generators as those days approach so they do not drain the grid on the blackout days.

And we should encourage Australian households and commercial enterprises to install diesel power, solar panels and /or batteries so that they too are not a drain on the grid on vulnerable days.

Again there should be an incentive and these actions would become part of the long-term plan.

Also part of the short-term plan, we need to try and reduce demand on these vulnerable days. The most effective way of doing that is to put up the price substantially on those days with, say, two days’ warning. It will be hard on the community but better than blackouts. Maybe in individual situations we might give monetary relief. If we do all the above there is a chance we can avoid blackouts but we can’t avoid price rises.

I am afraid we need to get tough on gas. Opposition Leader Bill Shorten has made some strong statements about gas and the Prime Minister needs to meet with him and together set out a gas policy which will inevitably involve garnishing say five per cent of our gas output on the eastern sea board for domestic use. A reasonable price will need to be paid but not an excessive one. This will also curb electricity price rises because gas costs are a key element in power rises. In a crisis surely we can expect our two leaders to reach agreement and I believe both are headed in the same direction anyway.

Step three: Longer term

Here I am inserting my views in addition to those of the experts.

I believe that it is now time for the commonwealth to use whatever powers are available (defence, emergency etc.) to take control of the Australian energy situation.

The interconnection of distribution and generation between states makes it impossible to solve the problem longer term on a state-by-state basis. Realistically, states will not give up powers so I suggest a carrot that would also slash wastage. The commonwealth should delegate most infrastructure spending decisions to the states and end this crazy game where the commonwealth and the states second-guess each other all the time. Each state should have a fixed amount from the Commonwealth to spend on infrastructure at their discretion.

About 20 per cent of the commonwealth infrastructure spend should be retained for commonwealth allocation. At the moment the only state winning is New South Wales partly because of the personal relationship between the Prime Minister and Treasurer and the New South Wales government.

The central energy controlling authority that takes control should report to a policy body where the commonwealth has the majority but the states have representation. But the controlling body must be dominated by the best world engineers in electricity and gas — not public servants or politicians.

We now don’t have a political problem — we have an engineering problem. We have plonked renewable energy generations in places that are inconsistent with our network. We need to co-ordinate our various forms of generation and our energy distribution to maximise their usefulness. In short the system is a total mess because everybody has been acting in an uncoordinated way.

We should set the engineers three equal priorities — low energy prices, a high proportion of renewable energy and reliability. Part of our energy mix must be a backup to our renewable energy sources and that back up will include pumped hydro energy (such as the Snowy) plus gas.

We should be very wary of spending vast billions to return to nationalisation because apart from the gas shortages created by some corporations in the Gladstone LNG projects, these problems were not created by corporations but rather by politicians in both major parties who did not understand what they were doing.

The engineers will come up with a plan that will be very expensive and take some years to implement, but it is essential we do it.

I fear that we will not implement this plan until there is a crisis caused by blackouts, gas shortages and doubled power and gas prices. We simply don’t have the calibre of politicians in Australia, and particularly in New South Wales and Victoria that are able to make the above fundamental decisions until the lights go out.