Originally posted to the Australian. Written by Perry Williams. See more here.
Australia’s heavy industry giants will lose out to their cheaper international rivals unless more reliable power generation can be guaranteed in the nation’s electricity grid, Energy Minister Angus Taylor has warned.
As the government looked to push forward with a controversial mechanism to underwrite new sources of generation in the national electricity market, Mr Taylor said the focus on “firm” supply was justified to balance a 250 per cent jump in variable solar and wind output over the next three years. “Retaining a dispatchable 24/7 supply in this system is a very big challenge in that environment.
“We realise we need to make an intervention to make sure that occurs. The crucial thing is we want that supply,” Mr Taylor said after touring the Australian Energy Market Operator’s control centre in Sydney yesterday.
“Workers in aluminium smelters, cement factories and fertiliser manufacturers know they need that 24/7 supply and if we don’t have it those jobs go to other countries. It is as simple as that.”
In the short-term, AEMO is seeking up to 930MW of reserve power to reinforce the power grid during what is expected to be a hotter, drier summer and an earlier bushfire season.
Consumers will be asked to carry the cost, with similar measures last year adding $6 to the average electricity bill in South Australia and Victoria to cover the cost of strategic reserves, including recalling mothballed gas-generation plants in Tasmania, Queensland and South Australia, diesel generators, and “demand response measures’’ that pay users to switch off their power.
However, AEMO chief Audrey Zibelman said it was a modest price worth paying.
“The cost of a two-hour blackout is so much more expensive than that,” Ms Zibelman said. “It’s almost like having car insurance. You never want to use it but you need to have it.”
AEMO had to use the reserve measures twice last summer — on November 30 and January 19 — at a cost of $52 million.
The moves come despite 2100MW of new generation capacity being added into the system this year, including rooftop and commercial solar, wind farms and big batteries in South Australia and Victoria.
South Australia and Victoria face a tight supply situation but the NEM operator said it was confident it was well prepared for peak demand on the grid this coming summer.
“This isn’t something we want to guess at or we want to hope for good weather,” Ms Zibelman said. “We want to make sure we have the plans in place but on an annual and long-term basis to make sure we have sufficient resources.”
The Energy Minister also fired a fresh shot at the big three “gentailers” — AGL Energy, Origin Energy and EnergyAustralia — saying they need to focus on customers and not just profit.
“Shareholders expect their companies to act responsibly in so many different ways,” Mr Taylor said.
“One of the obligations they should and can reasonably expect of companies they invest in is they do the right thing by their customers. And they haven’t always done that.”