How wind and solar removed major price spikes in South Australia

The Murdoch media and the conservative political parties show no signs of relaxing their extraordinary and ill-informed campaign against wind and solar, blaming these technologies for the electricity price spikes in South Australia and across the country, despite the principal cause being the surge of gas prices to record highs.

Conservative politicians over the weekend increased their calls for a review of renewable energy policies and further scrutiny over the construction of new wind farms, while the conservative media – the Murdoch Press and the Australian Financial Review – continued to screech their opposition to wind and solar.

But as we and others, including the South Australian government, have pointed out in recent weeks, the fault lies not with wind and solar, but with the soaring cost of gas, supply constraints from networks, and the unfettered power of the energy oligopoly.

This graph below, from the Australian Energy Regulator, shows the number of high price events – peaks of more than $5,000/MWh – across Australia over the last 15 years. As can be seen, they are currently running at their lowest levels ever, and have fallen rapidly since the build out of large-scale wind and rooftop solar.

Large spikes in electricity prices were common-place in the Australian electricity market, occurring nearly once every second day in summer months, when market operators had to turn to expensive gas generation to meet surges in demand. Most of those daytime peaks have disappeared now, because of the appearance of rooftop solar.

South Australia was the worst afflicted, because it relied on just a few powerful generating companies and was particularly reliant on gas. But since its major investment in wind and solar, those peaks have almost disappeared.

In 2015/16, a year in which the state sourced 37.7 per cent of its electricity from wind energy (see graph below) and nearly 7 per cent from rooftop solar, there was only one such peak. In 2008, it experienced 51 such events in the summer months alone.

It’s interesting to note that the state with the highest number of high priced peaks in the last five years – Queensland – is the state with the least amount of large-scale renewable generation.

South Australia’s historically volatile electricity prices and price spikes have been one reason why the government has pursued wind and solar.

The ACT government is already reaping the benefits of that, by locking in power prices from wind and solar for 20 years, and removing price volatility.

Australian corporate customers – complaining loudly about surging gas prices – have had the opportunity to do the same, and follow the example of Dow Chemicals, Google, Facebook and Apple. But they have chosen not to do so, instead encouraging a braying pack of media writing nonsense about green energy.

The media pack have duly obliged. We have written a number of stories pointing out the errors in the Murdoch media’s reporting, and the myth-making of the conservatives, including last week’s most-read stories Murdoch and Coalition go in guns blazing against wind and solar, and The anti-wind and anti-solar garbage fit to print in Murdoch media.

And on the weekend they were at it again.

“An energy crisis in South Australia created by an over-reliance on untrustworthy and expensive wind and solar ….. ” screamed the entire Murdoch media in unison in a syndicated story over the weekend. It even published what its chief political reporter described as a “great piece of investigation” into the electricity price rises. Except that it failed to mention, even once, the role of record high gas prices.

The Australian Financial Review followed suit. Although its reporting has been reasonably balanced, its editorial slant is clear.

“The South Australian Labor government’s rush into renewable energy, particularly wind power, has forced coal-fired generation out of the state,” it wrote in a leader article. “But it also has helped generate a surge in South Australian electricity prices that is making the Arrium steelworks even more uncompetitive, as well as hitting the Nystar smelter in Port Pirie and BHP Billiton’s Olympic Dam giant copper and gold mine.”

As the South Australian government and numerous analysts have pointed out, the large energy customers have had more than a year’s notice of potential supply constraints from the upgrade of the interconnector.

But they don’t seem to have adequately hedged. If they had struck the same sort of power purchase agreements as the ACT, these large energy users probably would have been paid to use the electricity.

Conservative politicians are also pushing for constraints on wind and solar.

The head of the Coalition in South Australia wants wind farms to be scrutinised, and halted if need be, and they and the Northern Territory conservative government want gas supplies increased, which means removing restrictions on coal seam gas drilling in the eastern states, or in the case of the NT, building a pipeline so it can export more of its reserves.

But we have already seen something of the Territory government’s attitude to renewables, with its absurd costing of solar and storage in an attempt to justify the decision to build new gas-fired generators in Alice Springs.

The South Australian government, however, seems determined to push through. It has been attacking the power of the incumbent fossil fuel generators, and the state of the National Electricity Market, which is tilted in favour of coal and gas-fired generation.

Its favoured way of doing this is to build a new interconnector, to allow a bigger flow of electricity to and from South Australia, reduce the power of a small group of generators, and remove constraints.

“What we need to do is smash the monopolies … by interconnecting with other jurisdictions so we can get our renewable energy out to other markets,” energy minister Tom Koutsantonis said. What the conservatives are proposing, he said, will simply entrench the power of the monopolies.