Simon Birmingham (SA, Liberal Party, Minister for Education and Training) Share this | Hansard source

I thank Senator Paterson, a fierce advocate for energy security and market efficiency, for his question. Mr President, through you to Senator Paterson, the retirement of Hazelwood will lead to higher wholesale electricity costs. The Australian Energy Market Commission estimates this closure will increase household costs across the national electricity market by $78. In my home state of South Australia, prices are expected to rise by $150 as a result of this. The closure of Hazelwood could also further worsen energy security in South Australia, because in 2015-16 Victoria provided some 14 per cent of South Australia's operational consumption.

After Hazelwood closes in March of this year, Victoria will be inhibited not only from its own production efficiently for its state but also from helping South Australia manage peak demands over the summer as Victoria potentially becomes an importer of power itself. This is a risk that South Australia can ill afford, having experienced a statewide blackout on 28 September affecting some 1.7 million people, many for several days. There was a further blackout on 1 December affecting 200,000 customers, and further subsequent to that.

The closure of Hazelwood will make Australia more reliant on intermittent powers as well, which poses two significant challenges for energy security. One of the challenges is it does not generate electricity consistently. Of course, wind and renewables vary in their generation. Wind, for example, in South Australia supplied up to 80 per cent of demand on one day last year and less than one per cent on another. Equally, unlike hydro gas or coal, intermittent energy does not generate a consistent quality of generation. All of these factors create problems for the reliability as well as the affordability of the market—problems we must honestly confront as a nation to have energy security in the future. (Time expired)