ABC 7:30: 10/02/17

February 10, 2017



ABC 7:30



STAN GRANT: Clean, reliable energy is emerging now as an issue that could shift votes at the ballot box and politicians are drawing the battle lines. Malcolm Turnbull as we heard, accuses Labor of draining the power supply because of a rush to renewables, wind and solar. While the Opposition says what happened in South Australia was not about supply but what market failure. Shadow Energy Minister Mark Butler joined me from Adelaide earlier.

Mark Butler good of you to join us. Josh Frydenberg the Minister has said this week that you have had the blinkers on. You’ve been looking to blame everybody, looking to blame the operator. Has there been too much blame game this week?

MARK BUTLER MP, SHADOW MISTER FOR CLIMATE CHANGE AND ENERGY, MEMBER FOR PORT ADELAIDE: Well I have sheeted some blame to the regulator, the operator of the market, about what happened in Adelaide on Wednesday because it has since become very clear that there was more than enough gas-fired generation in South Australia available to meet the local demand. The demand spiked very high in Adelaide because it was so hot but there was enough available gas and it is clear, for one reason or another, the market operator did not direct that gas generator at Pelican Point to turn on its second unit.

The Grattan Institute said this morning that because of that in Adelaide, it is now clear that either the rules of the national electricity market aren’t working or the regulator isn’t interpreting them properly.

GRANT: You say for one reason or another but I think people agree, but I think people are confused about where the line of responsibility is here. Is it the operator that is running a business? Is it the government? Does it rest with the Federal Government? The role of the State Government? There are mechanisms here where that could have been turned on.

BUTLER: Well that’s right - usually the market works on the basis that companies, these generators in South Australia were privatised so they are operated by big multi-national companies - usually it works on the basis that they will bid into the market when they think they’ll make some money out of it. But there is a failsafe mechanism that says that the federal regulator of the market operator, which reports to the Federal Minister Josh Frydenberg not to State Governments, if they think there is a possibility of a shortfall in supply they have the power to order generators to turn on their generation so that there will be sufficient supply in the system. 

That is for example, what is happening in New South Wales as we speak Stan because there is a very serious concern about sufficient supply there, the state that uses the highest amount of coal-fired generation in the country. And that was the position Adelaide found itself in on Wednesday. Yesterday in Adelaide -


GRANT: There is a role for the State Government too, isn’t there? That an emergency can be declared where the State Government can direct the operator to turn on in this case Pelican Point, to turn on the other power station? Why wasn’t that done.

BUTLER: That’s right, in a state of emergency. But this wasn’t a state of emergency this was a heatwave that happens all the time - 

GRANT: I think the people who lost their power would say this is an emergency right now -

BUTLER: Exactly -

GRANT: And we could have anticipated the potential for this blackout because of this extreme heat. 

BUTLER: If you would let me just finish the point. Extreme heat in Australia is not uncommon. It was not the sort of storm event that we saw in South Australia last September. This is a quite common heatwave and over the course of the summer the market operator will on a number of occasions direct generators in a particular jurisdiction to turn their generation on. 

They did it yesterday in Adelaide, which is why there was no blackout in Adelaide yesterday. They are doing it today in Sydney because of the shortfall of supply there potentially. There is no role for State Governments in the typical heatwave events you see in an Australian summer. That is why the market set up the market operator - an independent agency that is supposed to predict the demand that a particular jurisdiction would have for electricity and make sure there is no shortfall. That is not the state of emergency power you are talking about Stan. This is the usual operation of an electricity market during summer.

GRANT: But what I’m hearing here again is this operator is to blame, or that entity is to blame, or the Federal Government is to blame. Where is the clear line of responsibility? You’re accountable to your state. The State Government is accountable. People in Australia in 2017 should be able to expect that they can flick a switch and their lights come on, and I’m hearing once again just a lot of blame.

BUTLER: Look I think it is important that we be clear about what happened in Adelaide on Wednesday, because the Prime Minister tried to pretend that this was about renewable energy in Adelaide when actually it was about whether all of the gas-fired generators were turned on - and that in my view is a question about whether the federal regulator is doing its job properly. But your point is entirely right Stan, it is beyond time that the Federal Government led a mature debate about electricity policy. I hope the one thing that has come out of this terribly hot week in Australia first in South Australia, now onto the Eastern Seaboard, is a realisation at the national level that there is an emerging electricity crisis in this country. What we need is a mature discussion between both major parties in the National Parliament, the State Governments, the electricity industry, and business groups. The electricity industry, business groups, experts like the Chief Scientist and the Markets Commission, they have a clear view of what the way forward is. It is an emissions intensity scheme which they recommended to the COAG in December. 

GRANT: In this mature discussion, looking at the mix of power and being able to have reliable power at a price people can afford, do you accept that there is an ongoing role for coal?

BUTLER: Yes there is an ongoing role for coal and we have a mix of coal-fired generators in our mix now, some of -

GRANT: Building new coal-fired generators? 


KELLY: You don’t support that even though there is a role for coal?

BUTLER: There is a role for coal and there will be for many years. Some of our generators particularly in Queensland were only built over the last 10-15 years. They will be able to provide electricity for many years to come. 

I’m not being ideological over this I’m being practical. The industry itself, the industry that represents all of the coal generation sector, the Australian Industry Group that represents manufacturing, the banking sector have all said, to use their words, new coal is 'uninvestable’. No one will put money on the table to build new coal-fired generation in this country. It’s a fantasy. No one was talking about it for years until Malcolm Turnbull’s National Press Club speech a  couple of weeks ago. 

The future of building electricity in this country will be a mix between renewable energy, gas-fired generation, and the very exciting technology around battery storage and pumped hydro storage that is coming on board very soon. 

GRANT : And we’re right back to where we started from exactly. What is that mix and what proportion, and that’s where the argument begins and that’s where we’ll have to end it. We don’t have any more time. Mark Butler appreciate you giving us your time today. Thank you.

BUTLER: Thanks very much Stan.