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Tuesday, 14 February 2017
Page: 774

Renewable Energy

Senator FAWCETT (South AustraliaDeputy Government Whip in the Senate) (14:21): My question is to the Minister for Education and Training representing the Minister for Environment and Energy, Senator Birmingham. Can the minister explain the impact on South Australian households and businesses of the state's heavy reliance on intermittent sources of power generation?

Senator BIRMINGHAM (South AustraliaMinister for Education and Training) (14:22): I thank Senator Fawcett for his question. Of course he is interested, as am I, in energy security in our home state of South Australia. As Senator Fawcett would well know, last Wednesday at least 40,000 households and businesses in Adelaide lost power. This was at a time when South Australia had insufficient electricity generation within the state, as we were supplying only two and a half per cent of demand, due to low-wind conditions. The wholesale electricity spot price in South Australia, which had been averaging about $100 per megawatt hour, was regularly hitting the market cap of $14,000 per megawatt hour. The Australian Energy Market Operator is investigating this incident and will provide its report to the government shortly.

But of course this outage follows numerous other incidents, over months and years, of blackouts and brownouts. In particular, there was the state-wide blackout on 28 September, and there were further blackouts in December affecting some 200,000 customers, and others in recent months.

The state-wide blackout was estimated to cost South Australian businesses some $367 million. It particularly affected significant industrial operators, like BHP's Olympic Dam, Arrium at Whyalla and Nyrstar at Point Pirie. It affected manufacturers, like Michell Wool, who identified a $300,000 rise in the contract price of electricity—and, as they said last week, 'We've shut down two or three times; it was cheaper than paying the power bill'. It affected small businesses, like franchisees of a Royal Copenhagen business at Henley Square, who said, 'We're losing ice-cream hand over fist as soon as the power goes off'.

It does not matter if it is a small business, a big business, a pensioner or a student—everybody in South Australia is suffering as a result of this mismanagement of the electricity market in South Australia, the lack of generation capacity and the instability that has been created in that market.

The PRESIDENT: Thank you, Minister. Senator Fawcett, a supplementary question.

Senator FAWCETT (South AustraliaDeputy Government Whip in the Senate) (14:24): Will the minister inform the Senate what the Turnbull government is doing to respond to concerns about energy security and affordability?

Senator BIRMINGHAM (South AustraliaMinister for Education and Training) (14:24): We are absolutely prioritising energy security—ensuring the lights stay on and the power stays on—to support households and businesses. In the wake of the state-wide blackout, we have commissioned and brought to action the Chief Scientist Dr Alan Finkel, who will shortly deliver his blueprint for security at the national electricity market. We have commissioned and made sure that the Australian Energy Market Operator is stabilising the system by ensuring two gas-fired units are operating at all times, to ensure that there is more stability within the system.

We are seeking to address challenges of how to integrate more distributed and intermittent energy sources, such as wind and solar, into the system. We have opened a new round of $20 million for pumped hydro and storage technologies to respond to the challenges posed by intermittent sources, which comes on top of $100 million already invested in storage technology by the CEFC and ARENA. We are also investigating the deployment of high-efficiency low-emission carbon capture and storage facilities, recognising that a technology-neutral approach is the best way to solve these issues. (Time expired)

The PRESIDENT: Senator Fawcett, a final supplementary question.

Senator FAWCETT (South AustraliaDeputy Government Whip in the Senate) (14:25): Can the minister advise if there are any obstacles to a coordinated national approach to energy policy?

Senator BIRMINGHAM (South AustraliaMinister for Education and Training) (14:25): Sadly, we do face obstacles, in the form of state-based renewable energy targets and in the form of those opposite, with their own reckless renewable energy targets. Around 18 months ago, this Senate agreed to reform the renewable energy target. But it took only one month for the Labor Party, having agreed with the reforms that we put through at that time, to backflip, change their position and say they wanted to see a 50 per cent renewable energy target by 2030. They have never said what that would cost; they have never done any modelling; they have never released any details around it. But Bloomberg New Energy Finance estimates it will require $48 billion in investment. That is $48 billion in costs that will flow through to electricity users right around Australia. That is $2,000 for every man, woman and child, or more than $5,000 for every household in additional electricity costs that would come about because of the policies of those opposite. They need to realise that stability and affordability are key, and that is exactly what we are working towards. (Time expired)