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SA: the powerless state

Analysis

South Australia’s blackout has raised many questions about the state’s electricity network, but the truth is that such an event should never have happened – and it must never happen again, writes Richard Blandy.

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South Australia has just become the most recent entry in Wikipedia’s global list of major power outages since 1960.

The entry reads:

On September 28, the entire state of South Australia lost power following severe storms.

Over the past decade, Wikipedia says there have been 86 major power outages in countries around the globe. They are remarkably widely spread, geographically. Most are related to “weather events”, while some are related to “technical problems”.

So why has the blackout in South Australia caused such a stir?

The reason is that every power source went down across the state, creating a “black event” – which is rare, internationally.

Electrical systems need electricity to restart. Restarting from “black” is not easy. The fact that this was accomplished quite rapidly (for most of the metropolitan area, at any rate) was a very good effort by the technical people dealing with the crisis. Regional areas took far longer, however.

South Australians pulled together outstandingly in the face of this distressing – even frightening – event, and showed, again, that they are good people.

My wife and I were minding grandchildren when the power went off and eventually had to drive home. We were impressed by the courtesy and consideration of the motorists with whom we were mingling.

The police managed the traffic at major intersections well. ABC 891 was the voice of calm and hope, performing an important community service.

But let’s not pretend the event was anything other than a calamity for South Australia. Despite several days’ warning of an impending super-storm, those in charge seemed not to have taken adequate precautions. Afterwards, they attributed the fiasco to a “one in 50 years” weather event, rather than the fitness of the electricity network in South Australia to withstand it.

The Australian Energy Market Operator warned last month that the strength of the network was in decline, as wind and rooftop solar “have low or no physical inertia and are limited in their ability to respond to sudden large changes in electricity supply”. It warned that “emergency frequency control systems might not be fast enough to prevent a widespread disruption”.

The view that renewables need to be improved for them serve as a reliable source of power was supported by two articles published by InDaily on Friday.

John Hewson, who has been part of a commercial bid to build a solar thermal plant at Port Augusta, wrote: “As we transition from coal and gas-based power generation to renewables, the governments should require two conditions be met, namely that: all new wind and solar farms only be approved with effective storage; and, all existing wind and solar farms must install effective storage within (say) two years.”

Ross Garnaut, who is also the chairman of SA-based solar and battery storage company ZEN Energy, said: “One cannot completely avert the possibility [of a blackout, however] one could reduce the chances of severe weather events causing severe blackouts using battery storage. It’s especially necessary for solar and wind because they are intermittent power sources.”

Ten years ago, then SA Premier Mike Rann promised an interconnector to New South Wales to “fix” this state’s electricity system. Nothing happened. This year Premier Jay Weatherill allocated $500,000 in the state budget to fund a study by Electranet into an additional interconnector.

Why could the initial transmission line outage not be contained? Why did the whole state black out from an event hundreds of kilometres north of Adelaide? Why is our very long transmission network not compartmentalised to stop a severe but isolated event blacking out the whole state?

When I have a short at my house, the safety switch trips, but the short at my house does not black out my street, let alone my suburb.

Questions have also been raised about the age and maintenance of the 40-year-old pylons in the South Australian transmission network and their capacity to withstand a “one in 50 years” weather event. Why can transmission towers survive cyclones in Queensland but not extreme winds in South Australia?

The risk of investing in South Australia has increased

The truth is that such an event should never have happened, and must never happen again in South Australia.

We clearly do not have a reliable, affordable and sustainable electricity network in South Australia. This must be fixed by the state and commonwealth governments as a matter of urgency. To have the most expensive electricity in Australia now proving to be unreliable as well is just too much.

The economic costs of the blackout for South Australia are very large. Olympic Dam, Arrium and Nyrstar have suffered large losses. The chances of Arrium being sold have obviously taken a hit. Why would any prospective buyer take the risk that such an event might happen again?

The outlook is for further price hikes over the next two years and for more blackouts until the fragility of the grid is overcome.

The cost to South Australia’s reputation as a place to run a business has clearly been very adversely affected. The risk of investing in South Australia has increased. We can expect that private investment in South Australia will fall, with adverse consequences for the rate of growth of the South Australian economy and for employment and unemployment in our state.

Nigel McBride, chief executive of Business SA, was quoted in The Australian on Friday as saying that business insurance would not cover most of the losses incurred from the state-wide blackout.

“There will be people who suffered uninsurable loss…there could be costs in productivity alone of more than $2 billion…” he reportedly said.

If so, the enormous cost of the blackout could be about 2 per cent of gross state product.

Not only that, but the patience of our fellow Australians interstate is being severely tested as we call for their support yet again. We already have significant support from the rest of Australia through the State Grants Commission’s split of GST revenues, which heavily favours us.

Many people interstate believe that the submarine contract was overpriced as a means of subsidising South Australia at the expense of the rest of the country. We are seen interstate as a mendicant state that calls “wolf” all the time.

When a real wolf arrives in the shape of the impact of the severe blackout event last Wednesday, will the rest of the country be as sympathetic as it might once have been when we did not have our hand out all the time?

Richard Blandy is an Adjunct Professor of Economics in the Business School at the University of South Australia and a weekly contributor to InDaily.

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