Heatwave tests grid to the limit

Scorching summer days like those that engulfed Victoria and South Australia late last week tested the power grid to the limit. While the fallout could have been worse, the system was found badly wanting, with some Victorian hospitals issuing “Code Yellow” alerts and dimming lights amid fears of blackouts. Companies in both states were paid to reduce their power consumption.

Federal Energy Minister Josh Frydenberg was correct yesterday when he said the experience underlined the limitations of wind power and the dangers of SA moving too quickly to dump coal and gas in favour of renewables. Data from the peak days of the power shortage — Thursday and Friday — show wind farms across the country were largely still, as Matthew Denholm reports today. At 10.30pm on Thursday, when it was still more than 30C in parts of SA, wind generation had dropped to just 10 per cent of its peak at 7.30am. Solar had ended at sundown. As Mr Frydenberg says, SA is over-reliant on wind power, which is not only causing reliability issues but price volatility. As Victorians and South Australians sought to escape 40C temperatures, the wholesale spot price for electricity reached $10,000/MWh in Victoria and $13,000/MWh in South Australia. From a consumer perspective, Institute of Public Affairs researcher Daniel Wild hit the nail on the head when he said the reason so many people escaped the heat with airconditioning was coal and gas. Governments, as he said, must be technologically neutral about power generation. But they had subsidised wind at the expense of coal, resulting in high prices and less reliable supplies.

Sound economic principles must also underpin the promotion of electric vehicles. Mr Frydenberg believes their numbers could grow from 4000 to 230,000 within seven years, and one million by 2030. His vision may be right. But the government should resist industry calls for new $7000 tax breaks. Electric cars can cost tens of thousands of dollars more than equivalent internal combustion cars. There is no point in governments trying to “pick winners’’ with subsidies. If the cars fulfil their promise they’ll succeed in the market.