Since its creation in 1998, the National Electricity Market, which is Australia’s Energy Market Operator, has a strong history of security and reliability.
Between 2001 and 2015, the reliability target of 99.998% was met at all times bar one occasion in Victoria and one in South Australia.
Since then, chief scientist Alan Finkel has warned, there have been warning signs emerging in the technical data.
For example, in 2016, the NEM spent more time outside the expected operating frequency band than normal.
And in 2015 and again in 2016 the level of system inertia in South Australia was lower than in the previous five years, he said.
All of a sudden things have changed.
Blame it on solar panels and other disruptive forms of technology such as wind energy, or blame it on the aging fleet of coal-fired power stations. Whatever it is, the national energy market is in crisis mode.
The plain speaking federal Resources Minister Greg Canavan admitted as much in a recent interview.
“We probably, in my view now, if we had our druthers, if we could go back and look again at what was announced or approved under the former Labor government here federally there would have been more assessment done on the implications for energy security,” he told Sky News.
Canavan attempted to explain how the federal government could regulate gas exports so there was some left in Australia for domestic use.
“We're going to establish the licensing system on a calendar year basis that aligns with the gas export industry's planning they do on a calendar year basis,” he said.
“And we, of course, have to go through a process to make sure we're very careful about establishing what the shortfall number is, and we'll do that over the next few months.”
However, at the end of day consumers are still going to face a 20% increase in electricity prices, and approximately a 17% increase in gas prices from July 1 – something no politician likes to have happen on their watch.
Obviously members of parliament in the coal rich Bowen Basin have a difficult time trying to explain to their constituents why their energy bills are going up with so much coal lying around.
MP for the Queensland seat of Dawson George Christensen is strongly in favour of the government building coal-fired power plants.
Canavan was careful not to dismiss the suggestion by his parliamentary colleague.
“Well, I don't think we've taken any options off the table to solve this issue,” Canavan said.
“We've just gone through, we've taken fairly drastic action on the gas side of things. The issues emerging in electricity markets are similarly significant.
I think obviously we have a system in place where we prefer private sector investment into new power builds, but given the risk that is in the marketplace there is likely to be some role for government for identifying the need at least.”
The Australian electricity market is now at a critical turning point, according to Finkel.
“We must improve on what we have, to prepare for the growing wave of disruptive changes sweeping electricity markets here and around the world,” he said.
“Resilience is achieved by actively integrating new technologies to ensure needs are met.
“If we don’t actively manage these issues, we’ll end up swimming outside the flags.”
Hogsback actually thinks this a good analogy by the chief scientist. The Australian electricity industry is in dire need of a lifesaver.
