Dark ages beckon with green left energy policies

Illustration: Eric Lobbecke.

It can take a crisis to reveal true character. Australian Greens leader Richard Di Natale’s call to Victorians to toughen up in the face of threats to household electrical appliances shows he recognises the severity of the energy crisis and is willing to face the cost.

“Can you imagine the sacrifices that people made during wartime?” he asked viewers of Sky News last week. “And we’re not prepared to make a sacrifice that means for two hours during the day we can’t use a dishwasher? Please! Spare me!”

The evocation of the Churchillian spirit was not entirely inappropriate. Back in World War I, Winston ordered what was probably the first government-mandated blackout in an effort to deter the German navy from shelling the English south coast.

Today’s enemy is not the kaiser but the weather. Victorian Energy, Environment and Climate Change Minister Lily D’Ambrosio warned last Thursday morning that the state had been hit by “an extraordinary heat event” that was putting “extreme pressure and stress” on the energy system.

She encouraged Victorians to delay using their washing machines and dishwashers if possible, and for healthy people to consider turning their airconditioners to 24C.

Stinking hot days, as heat events once were called, barely caused a ripple in the state’s energy system until the Hazelwood power station was closed prematurely in March 2017. D’Ambrosio, readers may recall, was one of the loudest voices in the campaign to shut Hazelwood, describing the then Liberal government’s attempts to save it as “disgraceful”.

“Our state must be looking at ways to lower our dependence on brown coal and finding new ways to generate energy,” she lectured.

Victoria has indeed found new ways to generate energy, but none of it can be trusted in a crisis. Last week’s shortfall in capacity was hardly unpredictable. Indeed the Australian Energy Market Operator anticipated the sequence of Thursday’s events with remarkable perspicaciousness in a report in the middle of last year.

There was a one-in-three chance that Victoria would run out of power during the summer months, the AEMO forecast. In South Australia, the chances were one in five.

Load-shedding, a kindly euphemism for blackouts, would occur when temperatures rose above 40C towards the end of the day when business demand was still relatively high, residential demand was increasing and rooftop solar panels went to sleep. The AEMO’s long-term forecasts show that the reliability gap, the difference between capacity and demand at peak times, will increase sharply during the next decade unless more power plants are built.

The gap first opened in South Australia when the state’s last coal-fired power station at Port Augusta was closed in May 2016. The gap opened in Victoria with Hazelwood’s premature closure 10 months later, removing 1600 megawatts of generating cap­acity from the grid

AEMO expects a little respite across the next two summers before the reliability gap begins widening again with the retirement of AGL’s Torrens Island A gas turbines in SA.

That, however, is merely a taste of the energy market nightmare that will begin when AGL’s Liddell Power Station in NSW closes with the loss of 1800MW of capacity in 2022.

In four years, NSW will be our most energy-impoverished state in AEMO’s estimation. Its 380MW shortfall will be as large as the combined shortfall in SA and Victoria this year. By 2024-25 it will rise to 885MW, overtaking its southern neighbours.

By 2027-28 the shortfall in NSW will be 1220MW. The total shortfall in the National Energy Market will be 2200MW, six times larger than it is today.

This shortfall in capacity cannot be blamed on a lack of investment. At least $15 billion has been committed to renewable energy projects yet to be built.

Yet no amount of wind and solar will reduce the capacity shortfall since none of it can be trusted on a bad day.

What is needed is the incentive to invest in energy that can be called on 24 hours a day. Given the present state of technology, the moratorium on uranium and Australia’s hydro-adverse climate and topography, the affordable and reliable energy needed will have to come from coal or gas, possibly augmented by pumped hydro or batteries.

Whether enough firm generation can be built in time to avert the approaching energy drought depends largely on the result of the election.

The Coalition’s investment incentives for firm power generation have reversed the muddle-headed policy settings introduced by Labor, which favoured intermittent renewables.

The number of expressions of interest already received and the scale and scope of proposed investment are likely to break the hearts of those who insist there is no future for coal.

The Coalition’s incentives are certain to be scrapped by an incoming Shorten government that is committed to increasing the incentives to invest in renewables and decreasing investment in firm energy. Labor has tied itself to an unfeasibly large 45 per cent reduction in 2005 emissions by 2030 and a 50 per cent renewable energy target.

It has not yet said how many of our remaining 18 coal-fired power stations will close or how it will close a widening reliability gap.

Neither have we been told how Labor’s targets will dampen the economy or how many jobs will be lost. Bill Shorten and his climate change and energy spokesman, Mark Butler, want us to believe their renewable energy fantasy will be cost free. They haven’t yet found the courage to say how far electricity prices will rise or how many businesses will go to the wall.

Di Natale, to his credit, is at least prepared to admit that the greening of the grid carries a cost. He does not hide from the moral obligation that those who support such policies must be prepared to dip their hands in soapy water.

In the war against bad energy policy we have barely reached Dunkirk. It is not even the beginning of the end. But it may be, if wise heads prevail, the end of the beginning.

Nick Cater is executive director of the Menzies Research Centre.