Battery storage for renewable energy, two new gas-fired power plants and tougher legislation to intervene in the national electricity market headline the $550 million plan.
Energy Consumers Australia says the government’s proposals will help to restore security of supply.
“Consumers have had to contend with a series of costly and disruptive power outages this summer and the South Australian energy plan promises to deliver greater security and better outcomes on prices for consumers,” spokeswoman Rosemary Sinclair said.
The South Australian Chamber of Mines and Energy said the strategy had energy reliability at its core and would help businesses remain nationally and globally competitive.
“Importantly, the plan recognises the importance of gas in the energy market, both as a transition fuel and as a low carbon fuel delivering dispatchable synchronous generation.” chamber chief executive Rebecca Knol said.
However, the Property Council is less convinced, raising a warning about the flow-on impact of the big Government spend on other infrastructure projects.
“What the built environment needs is a reliable source of energy that keeps the lights on, but we also need to consider what the Government’s announcement means for infrastructure projects,” said Property Council executive director Daniel Gannon. “Investing in a new government funded generator will likely crowd out other projects and hinder South Australia’s much-needed infrastructure program.”
The Australian Industry Group said the State Government’s package was a “serious response” to the state’s energy problems.
“It is less clear how much these initiatives will help with SA’s other energy crisis, affordability,” said AIG chief excecutive Innes Willox. ” That will be more heavily shaped by decisions in other States and at the national level. This is particularly true for gas, where the effect of SA’s sensible production incentives may be lost if Victoria and others remain closed to gas development.”
State Opposition Leader Steven Marshall also sounded a warning on affordability, particularly the measure to require retailers to source a percentage of energy from local generators rather than Victorian coal through the interconnector.
“The reason why Victorian electricity pours across the border on the interconnector is because it is cheaper than electricity generated in South Australia,” Marshall said.
“Forcing retailers to reduce the amount of cheaper Victorian electricity and replacing it with more expensive power will drive up household bills and drive out jobs and investment.”
Federal Energy Minister Josh Frydenberg is concerned the South Australian plan will push up prices in other states.
The plan will be funded by dipping into the state’s projected budget surpluses and includes a $150 million fund to encourage new renewable energy investment.
Premier Jay Weatherill says the strategy will ensure the state’s energy security, put downward pressure on electricity prices and create about 600 new jobs.
But the Federal Government says it will actually drive up prices and will investigate if the wider powers to intervene cut across National Electricity Market rules.
Power company AGL doesn’t appear concerned, calling SA’s proposal a “considered and comprehensive approach” to challenges in the market.
While environmental and renewable energy groups have welcomed the increased funding for renewable energy.
Under its strategy, the government will spend $360 million to build its own 250 megawatt gas-fired power plant which will only be used in emergencies and will also use its bulk electricity buying power to encourage the development of another, privately-owned, gas-fired plant.
Gas supplies would be enhanced by an extra $24 million in government incentives to develop new reserves with landowners to benefit from a 10 per cent royalty on any gas extracted.
In addition the government will provide grants and low-interest loans to develop Australia’s largest battery to store up to 100 megawatts of wind and solar power to be dispatched into the market when needed.
The renewable energy fund will also be used to help develop other alternative energy projects such as solar-thermal plants, hydrogen energy systems and pumped-hydro.
– with AAPJump to next article