Rowan Ramsey (Grey, Liberal Party) Share this | Hansard source

I'm amazed by the last speaker's comments, which, on the one hand are decrying the lack of government policy and the lack of investment in electricity and then on the other hand shouting from the rooftops how magnificent it is that all these people are investing in renewable electricity.

Sometimes we learn from history, and we should learn from history. In South Australia, we've had quite a long and painful history in the provision of electricity prices. When I say 'long', the last seven or eight years have been quite problematic. I did some quick research this morning before rising to speak here. In February 2015, the wholesale electricity price in South Australia was $44. A month later it was $33. This is an average price for the month. In February 2016, it was $40, and then in March, it was $55. Then, in May 2016, the Northern Power Station closed. It closed because it was no longer economical, with a price of production of around $65 or $70 a megawatt hour. It was becoming increasingly unprofitable for them to supply electricity on a reduced number of days of the year because the renewable energy market had undermined that access to the market. So that closed and, by February 2017, the average price of electricity in South Australia was $179. In March, it was $122, so it had gone up by $80 a megawatt hour—by 130 per cent. In February 2018, it was $109. and then it was down to $80 in March. Perhaps the worst was over. In February 2019, it was $110, and then in March, it was $131. Then the federal government waved a big stick at the gas companies and said: 'You must produce more gas. You are restricting flow to the market.' That had a remarkable effect. By February the next year, it was back down to $64 and then $47 in March. Then this year, it was $22 a megawatt hour in February and $68 in March. It just cannot be that these two events are completely separate. Waving the big stick has made gas more available in Australia and has brought down the price of electricity, which is why we have now seen 18 consecutive months of a drop in retail prices for Australians, at least in the south-eastern electricity market.

There are some very important points in this. In that time in South Australia, there have been other things happen. There have been some good things happen. There has been a big investment in renewables and there has been investment in a couple of batteries. One is called the 'big battery'. That does a very good job in frequency modulation, but it doesn't supply base-load electricity. It doesn't supply that momentum to the electricity grid that it needs to sustain reliable supply of electricity. Only two months ago in South Australia, AEMO was moved to shut down rooftop supply. It was supplying 70 per cent of a thin market. It just becomes unstable on the grid.

We've got over 2,000 megawatts of installed capacity of wind in South Australia but AEMO limits those wind farms to 1,200 megawatts, because they know to bring on any more than that is too unstable for the grid. The point I'm making here is that renewables are the way forward but they cannot be the way forward unless there is an underlying strength in the generation market that enables them to survive. I am talking about my understanding of the electricity market and where the electrons have to be when you turn the switch on in Melbourne so your lights work. That is what needs to be understood in this game. And that can be provided by batteries, but at this stage batteries are very good for frequency modulation and about 10 times too expensive for deep storage. They're very fine if you want electricity on demand for an hour but an absolute disaster if you need it for three days.

Where can we find enough energy to be able to turn on, in the short term, for three, five, seven days when we are becalmed, as we often are in southern Australia through February, March and April? You find it in gas. That's where the answer is. And that's why the federal government's moves, firstly, in waving the big stick and now in ensuring that we will have a gas underlying insurance to the market, which is so important to the advancement of the renewable electricity grid. Renewables cannot keep expanding unless they have back-up technologies. We need to go to the cheapest, most useable forms of those back-up technologies for them to work. That's why electricity prices in Australia have come down over the last 18 months.

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