1 - State or National?

While I well understand the political drivers for this document, the provision of safe, secure, affordable, environmentally acceptable energy (note order) is properly a national responsibility.  That the powers of energy supply are with the states is a relic of the 1901 Constitution at which time interconnection or sharing of any kind between states was almost technologically inconceivable.  Today the reverse is true; all of the eastern states (and no doubt in time WA and the NT) are interconnected and mutually interdependent.  For electricity we have the NEM, for gas a broadly based but largely interconnected network.

That said, the powers of the Commonwealth are absurdly limited to the COAG Energy Council and a sense of hopeful; persuasion of the States.  There is no robust National Energy Policy and Energy White Papers have been anodyne motherhood.

In contrast, the States have policies which largely respond to uninformed populist sentiment (ie votes) rather than rational evidence based economically rational integrated plans.  Witness the absurdity of the various renewable energy targets, few of which have any rational pathway to their achievement.

Specifically the Australian Academy of Technology and Engineering (ATSE), in its submission to the Finkel NEM Review, finds as follows:

Many of the challenges to energy security and affordability have been caused by a changing technology landscape in the National Electricity Market (NEM). A diverse mix of proven and emerging technologies is available to help address these challenges. Australia needs a reformed electricity market that encourages planning for the long term needs of all consumers large and small, does not inhibit new technology solutions, and fully accounts for the environmental impact of electricity generation.

Key recommendations of this submission include: 

• Providing technologically neutral, market based mechanisms to reduce emissions and maintain system security at least cost. The electricity market must value energy security and reliability while, at the same time, fully accounting for the emissions produced by electricity generation. This will require market mechanisms to drive investment in dispatchable generation and the provision of essential system requirements, such as capacity or system inertia markets. It is also important to ensure that there are no barriers for new entrants, new technologies and new forms of services into the market.
• Establishing a stable and unified national climate-change and energy policy based on independent, expert science, technology and engineering advice. Policy uncertainty remains the most significant barrier to investment in the NEM. Clear, long-term bipartisan policy settings are essential to ensure the investments required for transition to a secure, equitable and low emission electricity sector.
• Establishing a body of independent experts to provide advice and guidance to optimise the transition of the NEM and address whole-of-system (generation (including emissions), transmission, distribution and demand) integration and transition challenges at a national level. Providing open access to NEM system data and models to technical experts and researchers will assist in improving transparency in the market.
• Embracing technologies for energy generation, transmission, distribution and storage that stand on their cost competitiveness, their contribution to system security and reliability, and their environmental and health impacts, including life-cycle greenhouse gas emission levels. 

Most importantly, the Energy Policy Institute of Australia (EPIA), strongly supported by ATSE, recommends as follows:

The Council of Australian Governments Energy Council (COAG-EC) was established in December 2013 to encourage a collaborative pursuit of national energy reforms and drive greater consistency and coordination between Australian government energy policies. The Energy Policy Institute of Australia has proposed that the COAG-EC’s decision-making processes be strengthened through the formation of a National Energy Commission8. This Commission, which would comprise acknowledged experts in both commercial and technical aspects of Australia’s energy supply, would report annually to the nine participating governments on planning and market issues. ATSE supports the need for greater independent expert advice and guidance to inform planning and policy developments, through a Commission or similar body. 

All the foregoing is simply to emphasise the importance of thinking and planning national, not state.  Turning now to “South Australian Power for South Australians”.  Comments are not in any order of priority.

2 - Message from Jay

This is all good current politics, but it ignores the predictions that have been made by informed power engineers for many years.  Most of todays problems were predictable.  The answers proposed are essentially crisis management, not long term rational strategic planning by experts.

3 - Overcommitment to renewables for reliable supply - and the importance of gas

SA has zealously followed the high penetration variable renewable energy (VRE) pathway, relying on coal fired electricity transmission from Victoria - which may not be so readily available in the future.  For years power engineers have pointed to the importance of gas as the interim fuel as coal declines, warning that unless new sources were made available supplies would be impacted by world markets offering twice the price for gas as LNG than that offered in the domestic market.  With, until now, the essentially populist political constraints to natural gas exploitation in SA, Victoria and NSW the inevitable outcome, with the commissioning of the Queensland LNG export plants, has been that domestic gas essential for power generation has become so costly that power prices have risen and perfectly serviceable gas generation plants have not had the gas (or the commercial incentive to use it at current electricity supply tariffs) to operate profitably, as they must. 

4 - Uranium - why is it ignored?

The Premier states that this State has ‘built its reputation on on its clean green environment, recognising that clean energy is the State's future'.  He is quite right!  SA has contributed far more towards clean energy generation from its uranium exports to nuclear enabled nations than from all of its installed and far less reliable subsidised VRE capacity, worthy as it is.  Yet the second sentence of the Premier’s Message, reminding us of our country’s abundance of energy resources which he lists, fails to mention uranium, notwithstanding the powerful and positive findings the recent SA Nuclear Fuel Cycle Royal Commission.  The Royal Commission was advised by an abundance of world class experts including noted scientists, engineers and economists.  Have they been ignored or forgotten?  If so, why?

5 - The Finkel NEM Review

There is only brief mention of this.  Would it not have been wise at least to await the Finkel report due in May or June and then to adapt its essential recommendations to the special needs of SA?

6 - Battery Storage and Renewable Energy Fund 

A 100MWh battery sounds hugely appealing at first blush; it certainly captures attention, especially if it becomes a gift.   Such a battery will undoubtedly add a degree of enhanced system security.  However, as pointed out by others, it would provide only 3-4 minutes of SA’s power on a typical demand day before the need to recharge.  Moreover there is no mention of grid connected pumped storage throughout the broader NEM system, yet pumped storage is typically an order of magnitude less costly than batteries and would have a far longer life.  I am uneasy at the reference to yet another ’technology fund’ - this time for $150M - a large slice of other people’s money!  Too often such funds, and the grants they support, are used to prop up otherwise non-commercial projects that would fail to attract private investment.  One asks if the proposed “Australia’s largest battery” has been thoroughly evaluated commercially and technologically against all alternatives?

7 - New State-owned gas power plant 

Has this project also been properly evaluated against all rational alternatives?  Where will the gas come from and at what price?  If the new plant can obtain gas at an acceptable price then why not utilise existing SA gas capacity?  Is the new plant standby or base load - it says standby, although there is reference to synchronous inertia.

No details are given of the massive 200MW of temporary generation to be provided.  Who will own and pay for this?  The taxpayer?  Surely long term planning at state level should have long ago foreseen this need and provided for it in a timely manner?

8 - SA gas incentives

It is encouraging to note that the State government will incentivise the exploration for and supply of more gas to SA.  How will it do this?  Why if it can be done has it not been done before, long before the closure of Northern Power Station?  The PACE Scheme, which appears to offer incentives to landowners (mainly farmers) whose properties are used for gas reserve extraction and piping to market, sounds an excellent and very fair move forward to help ‘unlock the gate’ where gas reserves can be safely exploited.  Landowners should certainly share in the benefits of such exploitation.

9 - Local powers over National Market

This to a layman is a puzzling aspiration.  SA generally does have a generation shortfall, relying on the Victorian interconnectors.  What exactly are the powers the Energy Minister would have at his disposal?  How are the valid security interests of interconnected states handled?  Can the SA Energy Minister really ‘direct the national market’?

10 - Energy security target

Surely the setting and maintaining of security targets is the business of AEMO?  This ‘new target’ suggests some kind of separation from national security targets.  Is this what is intended?

Understandably, this plan focuses on rapid response to avoid blackouts in the summer of 2017-18.  Its emphasis on gaining more local control over a market that's being manipulated by big players is essential. The commitment to batteries with a power output of 100 MW is a wise measure. However, the announcement of a large gas-fired power station (500 MW) of unspecified type is disappointing.

Since the principal challenge for next summer will be supplying peaks in electricity demand spanning 2-3 hours, open-cycle gas turbines (OCGTs), essentially jet engines, are the appropriate type of gas-fired power station. They have low capital cost and, if operated infrequently for short periods of time, low annual fuel costs. They can be started from cold in 10 minutes and are flexible in operation.

I hope that South Australia does not choose a combined cycle gas-fired power station, which would be slower to start-up, less flexible in operation, much more expensive and would reduce the opportunity for more renewable energy in the state.

For the longer term, explicit commitment to dispatchable concentrated solar thermal power with thermal storage, off-river pumped hydro, and demand management during peaks would have been welcome.

The SA plan is mostly an intelligent response to the need to provide energy security and a managed transition to clean supply. It is great to see some forward planning, in an age when politics is dominated by short-term thinking and opinion polls. It is sensible to provide storage to optimise renewable energy systems such as wind power. Battery storage makes sense, as does pumped hydro. The proposed Port Augusta solar thermal plant with storage should have been included in the package, as a higher priority than prolonging the fossil fuel era by building another gas-fired power station. SA is leading the other States in the transition to clean energy; it could aim to be powered entirely by renewables with storage by 2030, making it a desirable location for responsible enterprises.

Investing in efficiency improvements makes economic and environmental sense. The National Framework for Energy Efficiency, released in 2003, showed that we could save at least 30 per cent of energy through existing cost-effective technology. While it is often claimed that high power prices are a barrier to investment, that is only true for energy-intensive activities that already receive large public subsidies.

The context for this discussion is the policy vacuum caused by the Commonwealth government caving in to extreme elements in the Liberal Party. As a result, we have no serious national plan to slow global warming or facilitate the urgently-needed transition to clean energy. There is even irresponsible talk of using public money to subsidise uneconomic and dirty new coal-fired power in Queensland.

This looks like a sensible plan. Support for storage, including pumped hydro and batteries, and increased interconnection, will go far towards allowing South Australia to increase its renewable energy share while retaining grid stability. I would suggest that a better way to control demand than using gas is to monetise demand management, so that several hundred megawatts of demand can be curtailed by agreement with consumers at times of stress.

I think the main option which should be included is a large scale solar-thermal power plant, which has inherent storage built in - and this would be ideal for South Australia's long-term energy mix and future.

Also, the plan needs to consider the lock-in issues associated with whatever option is chosen - e.g. if gas is adopted, have the greater environmental impacts of unconventional gas been acknowledged (e.g. shale gas, coal seam gas)? And have the climate change implications of more gas over renewables been examined?

The need for a SA Energy Plan again reinforces the argument that there has to be a National Plan to achieve the reliable, affordable and low emissions electricity that is essential to our future. Coal is being forced out of the market, but policy uncertainty and market conditions mean that there is no investment in new plant that is outside the Renewable Energy Target.

The SA plan includes two new initiatives that will not fix the problem, but will make some contribution.
In a move back to public ownership of generating plant, the State Government will build its own 250 MW gas fired power station to provide peaking and emergency supplies. Private industry is reluctant to build new gas plants because of the uncertainty about future gas prices. The SA government will take this risk, and is trying to reduce it by associated incentives for gas exploration.

The second initiative is to provide a 100 MWh grid connected battery which with 50 MW maximum output could provide power to 10,000 houses for two hours at peak times. Grants and loans will make this project financially viable.

The SA Energy Plan reads like a script for a remake of “The Good, the Bad and the Ugly”. The Good is a new gas plant (a good transition technology) and the grid support battery storage. The Bad is the lack of any mention of demand management, energy efficiency or the low emissions generation technologies that are not weather dependent. The really Ugly is the “Brexit” State legislation taking SA out of the NEM with the Minister for Energy having the power to direct generators to operate and instruct AEMO on interconnector power flow!

The SA plan does not solve the many pressing issue of the National Electricity Market. The hope is that the Independent Review into the Future Security of the National Electricity Market (Finkel Review) will recommend changes to transform the electricity system.

I am in full support for the increase in storage in SA with gas generation providing a transition to a more renewable generation future.

Short term emergencies such as sudden loss of generation and interconnectors can be well handled by storage combined with customer load response. The report from AEMO on the 28 Dept 2016 event places much of the blame for the impact of the loss of the interconnector on the lack of synchronous generation in SA. I see the severity of the impact largely arising from a failure to initiate load shedding protection before the separation event. The interarea angle is a good indicator of the risk to the interconnector and for at least 3 sec before separation load shedding should have been initiated rather than waiting for a frequency drop after separation.

In the future, customer side response both in terms of batteries and in terms of selective load reduction will be a critical player in reducing the need for high level of margins on the interconnector. This will be enhanced through neighbourhood and centralized storage.

As noted in the preliminary report from Finkel, the current market is providing the security and capacity required. In particular the current energy market is not geared to provide appropriate incentives for customer engagement and significant reforms to value the fast response available from batteries and broadcast demand response. The advantage of less centralized storage is that is can respond to both state wide needs as well as relief for local overloaded lines.

Thus the immediate response of some centralized storage and increased gas generation may be appropriate while the infrastructure for a system of customer response to broadcast demand request is facilitated. Once the market appropriately values short term response from customers and neighbourhood storage then packaged systems will readily appear in a competitive marketplace and history has shown that customers can be willing to invest in their own energy resilience.