The looming crisis is much worse than I expected.
Three state governments, Victoria NSW and South Australia, have vandalised our total energy system. The Premiers of each state clearly had no idea what they were doing and did not sit down with top engineers outside the government advisers to work out the best way to achieve their objectives — whether that be an increase in renewables or gas restrictions.
Not until Josh Frydenberg came to be energy minister did the Commonwealth start to understand the extent of the disaster. Prime Minister Turnbull and Frydenberg have taken the first step in overcoming the problem with the Snowy pump hydro scheme, but it is only a small step and will take two or three years to be effective.
Here is what some of the best energy engineers in the country tell me:
• Without urgent action residents of NSW, Victoria and South Australia have a 75 per cent chance of blackouts next summer if the Hazelwood power station shuts on April 2. Those blackouts will cost the nation tens and tens of billions of dollars in the food, medicine and processing industries.
• Without government action gas supply might, repeat might, be sufficient in this year’s (2017) winter but there is no doubt there will be major shortfalls in the 2018 and 2019 winters;
• The Gladstone venture, in particular the Santos consortium, in effect “shorted gas” — i.e. signed contracts to sell gas they did not have while Shell has gas in the Bowen Basin but it is proving more costly to extract than expected Australia’s energy mess to spark our own Trump revolt.
• All industries and consumers will experience much larger energy costs from the network — but to be safe must also consider spending vast sums to be prepared for the power and gas shortages. This is third world.
• We have a power grid that has not been engineered for the decentralised sources of power that we are now generating led by renewables; many billions must be invested to make it efficient and that will have to be paid for by power users. The knowledge of how best do this is not held within the state or federal governments.
• The Snowy will help longer term but it won’t overcome the short-term crisis and many more Snowys are required.
So let’s go through some of those conclusions step by step and look at the causes and options
Blackouts are coming
Residents of NSW, Victoria and South Australia have a 75 per cent chance of blackouts next summer.
In the summer just past it was very hot in NSW and Northern Victoria, but cooler in Melbourne. We had blackouts in South Australia and went close to blackouts in Victoria/NSW when several NSW generators hit technical problems. If the wind and solar generation units installed to replace coal fail, as occurred in South Australia, there is not sufficient backup both in raw capacity and in network design.
To lock in the likelihood of blackouts for next summer the Victorian government is encouraging and allowing the closure of Australian’s largest generator: Hazelwood. Without Hazelwood, if it is simultaneously hot in Sydney and Melbourne blackouts are certain unless there is also a lot of wind in the right places and the network can get the power to the capitals. Answer: subsidise Hazelwood’s continuation at least until a clear plan is engineered to replace it (maybe NSW generators need to be boosted; certainly totally new back-up systems to solar and wind must be devised and implemented).