Energy pain in Spain should ring alarm bells in Australia

AEMO chief executive Daniel Westerman.

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A few weeks ago, Spain achieved an electricity landmark: 100 per cent renewable energy penetration. Fast-forward to this week and its entire electricity grid collapsed, plunging Spain and Portugal into a blackout that took more than 12 hours to overcome.

While the precise cause of the outage might still be unknown, there is little doubt why Spain’s grid lacked stability, with one fault triggering a cascade of catastrophic failure only minutes later.

The blackout across the Iberian Peninsula offers a cautionary tale to a country such as Australia, whose energy system shares striking parallels to Spain’s. In mid-2021, Australian Energy Market Operator chief executive Daniel Westerman set a goal essentially identical to Spain’s, and at almost exactly at the same time.

At the time, Westerman said: “The goal that I’m setting for us, Australia’s independent system operator, is to harness the talents, capabilities, experience and know-how across the industry, to engineer grids that are capable of running at 100 per cent instantaneous penetration of renewable energy. And do this by 2025!”

Just five months ago he conceded that the stability of the country’s grid had “been provided by the big heavy generators spinning at the same frequency as the grid, acting like a pacemaker for the grid to make sure the heartbeat remained stable”.

If we’re generous to Westerman, he was aiming for what we now know Spain did not achieve: a system that remains stable with high penetration of renewables. Still, it’s timely to reflect on how AEMO – and Australia – is progressing towards achieving what Westerman described as “uncharted territory for a large, independent grid anywhere in the world”.

We can start by inspecting AEMO’s charts. There was a new one issued in December, called the Transition Plan for System Security. This new analysis confirms the worst. Instead of being ready in 2025, we haven’t even moved past the head-scratching stage.

A few weeks ago, Spain achieved an electricity landmark: 100 per cent renewable energy penetration. Picture: AP

In a maze of bureaucratic buzzwords, AEMO reveals that we’re currently “progressing understanding of what is needed”. It’s really a plan to make a plan. In fact, it’s not even that: it’s a plan to plan some studies to inform what a viable plan might look like.

Last Wednesday – the day after Spanish media were praising the recent accomplishment of 100 per cent renewables – the Australian Energy Market Commission’s reliability panel wrote one of the most damning assessments of AEMO’s TPSS “plan” one could imagine, which it regarded as far too little, too late.

The panel struggled to avoid the conclusion that AEMO’s plan was really just a dubious combination of hand-waving and hope. In the end, the plan should be read as an admission by AEMO that it has no cogent plan to safeguard Australia’s energy security.

Even if we had a few spare years to figure out a workable plan, this reality would still be alarming. Here AEMO’s report is damning. In a section entitled “Spring 2025”, which addresses the “backstop capabilities” for all rooftop solar, it suggests all solar panels could be switched off by the operator in order to stabilise the grid. Anyone still uncertain about whether we’ve done our homework – which Spain obviously skipped – need only read the following section, “Spring 2026 – minimum demand thresholds reached NEM wide”.

These troubling admissions come at a time when the mask is slipping for the entire energy transition. We’ve been told to “trust the experts”, who have given repeated assurances that everything is in hand. We’ve been told renewables are reliable. We’ve been told they are affordable.

But behind the curtain, the experts are still figuring out what’s required to make this grand experiment work. They still don’t know what that looks like, and certainly don’t know what it will cost.

Many informed and concerned Australians are calling for a course-correction in our energy policy and debate. Just like former British prime minister Tony Blair, who has pointed out how the debate is “riven with irrationality”, it’s clear that the rush to meet arbitrary targets in Australia has meant serious costs and risks have been ignored.

Aidan Morrison is energy program director at the Centre for Independent Studies.