AGL says local renewables would offer more security than current grid

AGL Energy – the largest generator and retailer in South Australia – has dismissed the federal government’s suggestion that coal-fired generation could have avoided the complete blackout in the state last week, and said the best way to have energy security is to have a system of distributed renewable energy.

“It doesn’t make any difference what is hanging off the end of those wires,” AGL chief executive Andrew Vesey told the All Energy conference in Melbourne on Wednesday. “When you lose significant transmission and have significant change in real time between load and supply, bad things happen.”

His comments follow claims by industry, science and innovation minister Greg Hunt on Monday, and commentary in the Murdoch media, Fairfax and ABC, and other media outlets, that coal fired power could have prevented the blackouts.

Vesey, echoing comments by the grid owner Electranet and the Australian Energy Markets Operator, said it was a grid based event, caused by the massive failure of the network when 23 major transmission poles were ripped from the ground by the cyclonic winds.

Hunt said that if a coal-fired power station was running then the state-wide blackout needs to be avoided. Energy experts dismiss this, saying it shows a complete lack of understanding about the way the electricity system works. Even if the coal generator was operating, it would have lost its load and tripped.

Vesey reinforced this point. “They (supply and demand)  have to be in balance in real time,” he said.

The federal government has used the events to argue that the state-based renewable energy targets, which are much more ambitious than the national scheme, should be wound back in the interests of energy security.

But Vesey also mocked this idea, saying that the way to make the system more secure was to introduce more renewable energy, particularly at a local level. In effect, a series of micro-grids, as was adopted by New York (Vesey comes from New York) after Hurricane Sandy.

“If you have a system that was distributed – and didn’t have large transmission lines – you would have a more secure system,” Vesey said.

“That is a very reliable system – and you can only get there with renewable energy.”

Vesey did say that the market operator may have to review its mechanisms to protect against a system blackout, but this was a systems issue, not a source of supply issue.

AGL is rolling out a major new initiative on distributed energy, rolling out discounted and subsidised battery storage to 1,000 houses in Adelaide to create a “virtual power plant” that can respond to load and network issues.

It also flagged an upcoming program to help lower income households source solar and storage and to have solar and storage installed in community housing. This initiative would likely commence in NSW and then be moved to other states. Vesey said it was critical that the inevitable “energy transition” did not leave lower income households stranded.

Of course, AGL is also the biggest generator of coal power in Australia and the largest single emitter, and the operations of its gas plants and its domination of the South Australian wholesale market has also come under scrutiny.

However, Vesey warned about the current tenor of the debate about renewable energy – and the assumption that they are “causing higher prices, that everything about renewals is more expensive … that we have to slow this down.”

“When you slow things down to process and policy it takes a long time to sort out,” he said. “This is time to be proactive, to think about solutions.”