SA Power Shock on Renewable is Not to Blame Says the Grattan Institute

Jon Capistrano
Jon Capistrano
September 28, 2016

The Turnbull government should overhaul its climate change policy to avoid another South Australian power crisis, according to a new report as reported by AFR.

The report by The Grattan Institute stated that the July power shock in South Australia, where power prices went sky high is becoming increasingly reliant on renewable energy.

According to the Institute, it was not an example of market failure. But it has highlighted the need for the federal government to have a more effective climate policy that dealt specifically with the national Electric Market, which is undergoing a major change as older, black and brown coal-fired power stations prepare to exit the country’s energy mix.

According to the report, the market worked as it was meant to and the lights stayed switched on, but the incident exposed or showed potential threats to the price and reliability of power in South Australia. Even more, it also revealed the country’s immediate need to create climate change and energy policies that combine to produce affordable, reliable and sustainable power.

According to the Grattan Institute energy program directors TONY Wood and David Blowers report, once there’s certainty over climate change policies, there should be a full review of the NEM that has been in existence since 1998.

Mr. Wood also previously backed an economy-wide carbon price as the best mechanism in transitioning the country’s energy mix towards renewable energy. But a political compromise of a baseline and credit scheme as proposed by the Climate Change Authority will be a step in the right direction.

The report looked into the circumstances that surround the South Australian power crisis when the average wholesale prices of power reached $230 megawatt-hour, which is 4 ½ x more as compared to the eastern states.

Click here to read the full story in AFR and here for a related story

Featured Image Credit: Paul Sableman

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