A new Grattan Institute report has found the common argument that the intermittent nature of renewables is responsible for electricity outages, such as the 2016 statewide blackout in South Australia, is patently untrue.
The report Keep calm and carry on shows the idea is wrong because almost all outages are caused by problems in transporting electricity, and have nothing to do with whether the power was generated from new renewables or old coal or some other technology.
Political leaders and media commentators have linked the 2016 state-wide blackout in South Australia with that state’s high level of wind power. But according to the report, they haven’t recognised that the electricity market operator has since changed management practices to better suit the changing shape of the energy system, and a combination of regulatory obligations and market mechanisms are being applied to support grid stability as the system continues to evolve.
Equipment failures, falling trees, inquisitive animals and crashing cars can all cause the power to go out in the local distribution network. But it would be prohibitively expensive to try to prevent all these outages.
The NSW and Queensland governments spent $16 billion more than was needed on distribution networks over a decade, while achieving only very small improvements in reliability – and households and businesses are still paying for this through their power bills.
Regulators and network businesses need to carefully balance cost and reliability as technology and consumer preferences change. Consumers will not be happy to pay for another round of network ‘gold-plating’.
Events in Victoria and SA in January highlighted the current tight balance between supply and demand. As old coal generators are closed and summer heatwaves become more severe, outages will increase unless investment in new supply follows. But a lack of generation capacity on hot days caused only 0.1 per cent of all outages over the past decade. To encourage investment and keep this problem rare, governments need to create a stable policy framework to reduce greenhouse gas emissions and ensure that retailers have enough supply.
Grattan Institute’s Energy Program Director, Tony Wood, said, “What Australia needs now is not panic and politicking, but cool-headed policy responses to manage electricity reliability without unnecessarily adding to consumer bills.
“Increased renewable generation does create challenges for managing the power system. But if we keep calm and carry on, these challenges can be met without more big price increases for households and businesses.”
You can read the report here: https://grattan.edu.au/report/keep-calm-and-carry-on/