Power crisis about reliability credibility and confidence

Power crisis about reliability, credibility and confidenceThe South Australian Government’s promise to spend $5 million on a new gas-fired power plant and the nation’s largest battery has implications for the property industry.Last week, the Weatherill Government announced its plan to address South Australia’s energy crisis by building a new $360 million, 2-megawatt gas-fired plant for grid stability and emergency power needs. This is to be complemented by a 100-megawatt battery financed with money from a new $1 million renewable technology fund.At the same time, the Turnbull government unveiled its $2 billion plan to double energy from the Snowy Hydro scheme, with 2,000-megawatts of renewable energy enough to power half a million homes. While federal energy minister Josh Frydenberg seeks legal advice on whether South Australia’s move breaches national electricity market rules, the Property Council’s executive director in South Australia Daniel Gannon says there are no simple solutions to the state’s energy woes.”We face a potentially debilitating energy crisis with no end in sight,” Gannon says.Blackouts have disastrous financial consequences, Gannon says, as South Australians discovered last September.Following the state-wide power failures, a poll of Property Council members found that almost 75 per cent of respondents believed blackouts adversely influenced investor confidence.”Five per cent of respondents to the Property Council’s survey indicated that they had incurred a loss of more than $100,000 as a direct result of the September blackout,” Gannon explains.Some experts have said there is no evidence that the state’s blackouts were caused by dependence on wind power. However, two reports tabled prepared for the Department of Premier and Cabinet in 2009 when the Labor Government was setting renewable energy targets, and released under freedom of information this week, found that grid stability would be compromised if wind generation exceeded 20 per cent.During the second half of 2016, wind made up 30 per cent of the electricity generated in South Australia.The federal government’s forthcoming Independent Review into the Future Security of the National Electricity Market, chaired by Dr Alan Finkel, is currently examining the “energy trilemma”, or the need to “simultaneously provide a high level of energy security and reliability, universal access to affordable energy services, and reduced emissions.”The Property Council’s policy manager Francesca Muskovic says the Finkel Review, which considers the future stability of the national energy market, could make any plans by the Wetherill Government redundant.”With gas prices as they are, the transition towards renewables and the industry’s preference towards onsite generation of solar and wind, many of our members are already phasing out gas,” she says.”Demand is the cheapest way to address energy security and reliability – and yet there is no mention of demand side initiatives in the South Australian Government’s plan,” she adds.The Low Carbon, High Performance report, developed by the Australian Sustainable Built Environment Council, finds that improving the thermal efficiency of buildings and ‘fuel switching’ – moving from appliances that use gas, wood or other fuels to electrical alternatives – can cut our projected 20 emissions by more than half.However, Muskovic says Australia cannot rely on renewables without considering forms of storage that stabilise the intermittency of renewable generation. “There has been no future planning by the federal government on replacements for base load generation as large coal power stations close over the next three decades,” she says. Muskovic says the Property Council’s submission to Finkel Review recommends five policy solutions: incentivise energy efficiency and onsite generation, increase minimum energy performance requirements, introduce a nationwide energy efficiency trading scheme, integrate demand-side action into energy policy and reform energy pricing.”The built environment consumes about half of Australia’s electricity. We are a massive consumer of electricity, and our concerns are going unnoticed,” Muskovic says.”Business wants to see governments commit to solutions together. The challenge is that South Australia can’t afford to wait.”Gannon says there is a lot riding on this issue.”The Premier has declared energy is the biggest issue for the next 12 months. Energy is fundamental to investment – but so are jobs and population growth, reducing red tape and a host of other policy issues.”What the built environment needs is a reliable source of energy that keeps the lights on, but we also need to consider what the government’s announcement means for infrastructure projects.”Investing in a new government funded generator will likely crowd out other projects and hinder South Australia’s much-needed infrastructure program.”South Australia’s power crisis is an issue about reliability, credibility and confidence.”The final Finkel Review is expected to be delivered mid-year.