South Australia puts its cards on the energy table
The South Australian Government just announced a brave plan to take control of its energy security and reliability issues.
Timing is everything.
It’s understandable that the SA Government has taken this bold action. With the Finkel Review in full progress and expected to release its findings in a few months, it must have been tempting to wait.
South Australians are at their wits end and face more interruptions over the year ahead if action is not taken swiftly.
As expected, investment in battery storage features highly. And so it should. But the plan has other components including building a new 250 MW gas fired power plant costing $360M to act, in a crisis, as a back-up source for energy generation.
The plan has a number of important actions. Few will argue that it’s time to invest in large scale batteries. The excitement over the weekend on Twitter was fascinating. If Elon Musk can start a bidding war enticing the world’s best to come to Australia this can only be a good thing.
Investing in gas generation makes sense and will clearly help address some of the intermittency challenges with SA’s significant wind and solar generation sources.
But where is the gas going to come from?
Will land owners be convinced by the incentives that will be offered by government and industry? Time will tell if people are going to get on board.
And what about gas pricing?
At this week’s Australian Domestic Gas Outlook conference there will be lots to talk about on the merits of this gas plan.
My dialogue with the business community across the country is clear. We need energy that is secure, reliable and affordable while meeting our carbon reduction targets. Business is excited about the advances in batteries and this initiative will be a game changer in Australia.
However, the desire to gain local powers over the national market makes me uneasy. Concerns are valid. While the National Electricity Market rule making and regulation process has had its challenges, it is designed for the national market. There are risks with this part of the plan and we need more information to make meaningful assessments.
Moving forward on energy security and reliability is critical for the SA Government. The competition for the ‘battery solution’ will be intense based on national and global interest in the South Australian energy crisis. The same will apply for the gas plant. Proper consideration of the proposals technical and commercial elements will be vital. While the rush to get a solution quickly in place is compelling, evaluations of all aspects including risks will be of critical importance.
South Australia has now showed its hand. Stakeholders from industry, Federal Government and market operators will need to respond. The great news is that there is an opportunity to get progress on battery storage and introducing more gas in the energy generation mix. If South Australia takes a lead role on these elements there will be benefit for others.
The card game is far from over.