Electricity Generation

Mr VAN HOLST PELLEKAAN (Stuart) (14:40): My question is for the Minister for Mineral Resources and Energy. Does the minister stand by his claim that we have sufficient electricity generation capacity within South Australia? With your leave and that of the house I will explain.

The SPEAKER: No, we have an understanding, in order to maximise the number of opposition questions, that there won't be explanations. Minister.

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:40): I do stand by the remarks that I have made in this place and in many other places that the problem with the National Electricity Market is not available generation; it is its dispatch. There is an oversupply of generation in this state for average demand. There are times of peak demand across the country when places like New South Wales are short, Victoria can be short, South Australia can be short, and the reason they are short is that these types of high demand come around maybe once or twice at most five times a year.

The idea that you would have 3,000 megawatts continually operating in that kind of marketplace wouldn't be economical. The question is: how much generation do you have sitting idle in those periods when you don't have that peak demand? Again, this is a complex matter for the National Electricity Market. How will investors invest in peaking generators and other forms of generation like battery and other things that come on and are there to meet peak demands that come along rarely? That is the problem with the National Electricity Market: it does not incentivise it.

The way that it attempts to incentivise it is through its pricing. You can have a price of up to negative $1,000 where you pay to take electricity up to $14,000 a megawatt hour, so you send price signals out into the market and those price signals are there to try to help recoup some of the holding costs of those generators that are sitting in the NEM. But in any one day there is sufficient supply of electricity to meet our demands. The problem we have is the way that the NEM is being run is not optimal for the profitability of our local generators. It is not conducive to their making money.

We need to change the system. The question fundamentally is this: do you prefer South Australian gas or Victorian coal? On this side of the house, we support South Australian gas. I know members opposite have an aversion to gas. They have an aversion to South Australian gas. They would much prefer to support coalmines in Victoria—

The SPEAKER: Point of order, member for Morialta.

Mr GARDNER: The minister is debating: standing order 98.

The SPEAKER: He is. I uphold the point of order.

The Hon. A. KOUTSANTONIS: We make no apology for doing everything we can to incentivise local generation, whether it be wind, solar, other forms of renewable energy and gas. The reason we incentivise that is so that we can have as much available thermal generation and renewable generation as possible to help us transition to a completely carbon-free future. The only way that you are going to transition to a carbon-free future is to have gas as that transitional fuel, and the only way that you can have gas as the transitional fuel is through a liquid market. Moratoriums and bans do not work, and members opposite have finally got a mining policy: they are going to ban gas. The member is nodding.