Powerful questions about SA's Energy
Senator GRIFF (South Australia) (14:30): My question is to the Minister representing the Minister for Energy and Emissions Reduction, Senator Birmingham. In recent months the Australian Energy Market Operator warned that the outage of two Victorian power units poses a significant risk of insufficient supply this summer. The Australian Energy Regulator released data showing sharp reductions in surplus generation in Victoria and New South Wales, and we know the coming summer will be very much hot and dry. This all points to a greater likelihood of higher power prices and power cuts this summer. Given that Victoria is South Australia's only link to the national grid, I'm particularly concerned about the potential for a blackout in Victoria affecting my home state of South Australia. Minister, has the government received any recent advice about the potential for blackouts this summer in South Australia or Victoria?
Senator BIRMINGHAM (South Australia—Minister for Trade, Tourism and Investment and Deputy Leader of the Government in the Senate) (14:31): I thank Senator Griff for his question, particularly as it relates to energy reliability in our home state of South Australia. Certainly, Senator Griff, I can reassure you that the Morrison government, together with the Marshall Liberal government in South Australia, has been working to ensure enhanced reliability of the grid in South Australia.
Recently the Australian Energy Market Operator released this year's Electricity statement of opportunities. This shows that grid reliability in SA is in fact improving. In 2018, AEMO reported that the reliability standard as set by government would be exceeded in South Australia—that there would be heightened risk of blackouts. Going in now, the forecast for 2019 shows that that is no longer the case, that that reliability standard is, in the context of South Australia, expected to be met. It is met by a range of factors, including increasing energy generation in the state, some through renewable capability and some that can provide the type of peaking support to provide for reliability.
Last week Minister Taylor opened additional gas-powered capability on Torrens Island. The new 210-megawatt Barker Inlet Power Station will complement the very high shares of intermittent wind and solar generated in South Australia, reducing prices and helping to improve reliability. We're also pursuing a range of other measures to help with reliability. The main risk in the National Electricity Market, as you identified, Senator Griff, indeed now comes from Victoria. In that state, we have seen that the threat of blackouts is real, and that's a result of the shutdown, driven by state government policies there, of large generators and a state government that continues to insist on a gas ban, which puts real pressures in terms of their energy market generation.
The PRESIDENT: Order, Senator Birmingham. Senator Griff, a supplementary question?
Senator GRIFF (South Australia) (14:33): In January this year the temperature reached 48 degrees, as you know, in Adelaide and the electricity system was very much pushed to its limit. Generation was insufficient, leading to power cuts in Victoria and average weekly prices of more than $1,000 per megawatt hour in SA and Victoria, the highest on record. What is the government's plan to avoid price surges in South Australia this coming summer?
Senator BIRMINGHAM (South Australia—Minister for Trade, Tourism and Investment and Deputy Leader of the Government in the Senate) (14:33): Indeed, that additional energy generation in the South Australian market importantly will not only contribute to reliability but contribute to a greater stabilisation of power prices in South Australia. In fact, one of the proof points in terms of the threats that exist now in Victoria relative to South Australia is that Victorian power prices have now overtaken South Australia's as the most expensive energy in the nation. Our policies are yielding dividends in relation to stability in SA. That's partly a result of our work and partly a result of the work of the South Australian government and the close collaboration between the two of us. We continue to work to pursue other opportunities, such as through the Underwriting New Generation Investments program, which is looking at new reliable generation opportunities in South Australia to provide for peaking capacity that can help to smooth the system as required.
The PRESIDENT: Order, Senator Birmingham. Senator Griff, a final supplementary question?
Senator GRIFF (South Australia) (14:34): Minister, the COAG Energy Council is the forum for the Commonwealth and the states to work together on energy policy, and it met six times in 2018 but has not met yet in 2019, which is quite a big concern. Can you explain why the energy council has not met this year and why the government is not making greater use of this forum to manage the risks facing South Australia?
Senator BIRMINGHAM (South Australia—Minister for Trade, Tourism and Investment and Deputy Leader of the Government in the Senate) (14:35): The COAG Energy Council will, I understand, meet on 22 November, and, although it hasn't physically met recently, it has continued to pursue work, including out-of-session work, during the course of this year. The government's new retailer reliability obligation was agreed by ministers at the COAG Energy Council out of session in May this year so the government could implement this key election policy effective from 1 July—a retailer reliability obligation that is now triggered in relation to aspects of the Victorian energy market and helping to ensure that supply can meet demand in Victoria over the coming summer. The council continues to work on other key issues out of session. The department convened a general business meeting of senior committee officials on 2 August 2019, helping to inform the discussions that will occur on 22 November, focused as they will be on affordability and reliability, as our government is at every step of the way.