Mr RAMSEY (Grey—Opposition Whip) (18:51): South Australia is the state that is both the least and the most reliant on natural gas to supply its electricity. That sounds a bit strange, doesn’t it? But in South Australia last year our electricity grid was 71.5 per cent renewable. More than 4,000 megawatts of installed capacity in South Australia is renewable. Some 2,740 megawatts of that comes from large-scale generation, and the other 1,300 megawatts comes from rooftop solar. Yet we pay the highest retail rate for our electricity in South Australia—and not by a small margin, but by 50 per cent. We are 50 per cent higher than the next highest state, Victoria, where they have 36.8 per cent renewable electricity. We have double the renewable capacity and double the renewable energy, but half as much again with the price. You have to ask yourself why this is.
Of course, there are two main reasons. The first is the intermittent nature of wind and solar and the need for an alternative dispatchable source capable of powering a whole network at any one time. The second is renewable subsidies. I won’t go into those at length here, but they’re invisible to the whole market but embedded in your retail bill. I took a snapshot on my PocketNEM last week. I know I’m not allowed to use props, but it shows me that the wholesale price in South Australia last Tuesday evening was $9,900 per megawatt hour, which, to put it in layman’s terms, is roughly $9.90 a kilowatt hour or 20 to 25 times the retail price. I can tell you that at that time every peaking station in South Australia was going flat out. All the gas was on. We don’t have coal in South Australia anymore. That was driven out by renewable energy. But every peaking station was on. Every battery was flat because we’d been through a wind drought, if you like, in recent months and we were totally reliant on either the gas or the electricity from Victoria, which is largely from coal of course. As I said, it showed that at that time what we needed was more gas generation, but there was no other viable option.
So what are we doing at the moment? South Australia’s last combined-cycle gas generator was built at Pelican Point and commissioned in 2001. I won’t go into details as to why combined cycle is so much more efficient, but it not only uses a jet motor to run a generator; it also runs a steam turbine to harvest the heat. Everything apart from that—and there hasn’t been a lot built—is what we call peaking generation, which is basically a jet turbine mounted on a generator. So when it’s dark and becalmed, as it often is in autumn, we are almost totally reliant on gas in South Australia.
It’s worth noting that when renewables begin their penetration into the market it’s a very easy fit, because the full backup is available from the existing generators. However, as they gain market share, the cost of backup increases on a parabolic curve. The higher the level of renewable generation, the higher the unit cost of backup. That is because it’s not used as often as it would to make an economic return.
At this stage, the cheapest form of backup is gas. It’s not perfect, and perhaps one day it’ll be replaced. Here in Australia, interest in gas exploration is crashing. Approvals have stalled, and the government has imposed a cap on gas prices. Producers have had to comply, or are having to comply, with safeguard mechanisms, which are going up every year, year on year. Environmental approvals are on go-slow and drowning in red tape. Climate change activists have co-opted Indigenous bodies to frustrate, complicate, delay and increase the cost of new projects. The government has imposed a water trigger requirement and strengthened union bargaining positions.
I wonder why gas development has gone on an overseas holiday. It is pretty plain. The coalition has proposed a nuclear future, but, to get there, we need gas as an essential transitional energy source. The government has said they’re heading for 100 per cent renewables, but guess what? In that case, gas is even more essential—not only for the transition but for the inevitable outcome in 2030 that we find we cannot reach the 82 per cent they’ve already laid down as their objective.
Gas is one of our economic strengths. Let’s not give it away, as we’ve given away so many of our other economic strengths. As countries like China continue to build new power stations based on fossil fuels, we are shutting down our industry.