Australian Energy Market Opertaor Final Report Update

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:12): I seek leave to make a ministerial statement.

Leave granted.

The Hon. A. KOUTSANTONIS: I rise to inform the house on the fourth and final report of the Australian Energy Market Operator's review into the black system event in South Australia on 28 September 2016. The report consolidates the information previously published in AEMO's three preliminary reports as well as outlining the learnings and actions taken since the incident.

The report states that, on the afternoon of 28 September 2016, tornadoes with wind speeds between 190 and 260 km/h struck South Australia. Two of them almost simultaneously damaged a single circuit 275 kV transmission line and a double circuit 275 kV line some 170 kilometres apart. The damage to these three transmission lines caused them to trip and begin a series of faults occurring in quick succession, which led to six voltage shocks to the state's grid in the space of two minutes.

The report states all online wind farms successfully rode through faults until a preset limit, which allows a maximum number of successful ride-through events, was reached or exceeded. This resulted in sustained power reduction that led to an overload of power being imported through the Heywood interconnector which, in turn, switched off. The system then became separated from the rest of the national energy market. The remaining generation was much less than the connected load and was unable to maintain the islanded system frequency. As a result, all supply to SA was lost at 3.48pm. AEMO's analysis shows that, following system separation, frequency collapse and the resultant system black was inevitable. Page 47 of the report clearly states:

The most well-known characteristic of wind power, variation of output with wind strength (often termed 'intermittency'), was not a material factor in the events immediately prior to the Black System.

Mr Marshall interjecting:

The SPEAKER: The leader is warned.

The Hon. A. KOUTSANTONIS: I will repeat it:

The most well-known characteristic of wind power…(often termed 'intermittency'), was not a material factor in the events immediately prior to the Black System.

AEMO has outlined a number of factors they say must be addressed to increase the prospects of forming a stable South Australian island and avoiding a system black. They include sufficient inertia in the system to slow down the rate of change of frequency, sufficient frequency control services to stabilise frequency of an islanded system in South Australia and sufficient system strength to control voltage issues and ensure inverter-connected generators operate correctly.

I am pleased to inform the house that our energy plan explicitly addresses the issues identified by the national market operator. Our backup gas-fired generator will provide constant inertia in the system as well as emergency generation. Our increased powers will also assist in circumstances where demand is predicted to outstrip supply and direct alternative options to load shedding as well as reducing flows on the interconnector where necessary. Frequency and voltage stabilisation will be addressed by our battery project, providing up to 100 megawatts of storage.

We are already imposing extra conditions on generators in South Australia to ensure they can ride through these kinds of disturbances in the future. I can inform the house that in the hours following the release of this report, the Chairman of the Australian Energy Market Operator, Dr Tony Marxsen, was in Adelaide today addressing the Committee for Economic Development of Australia. He had this to say about the review into the events on 28 September:

I stress again, the black system had very little to do with the type of generation that reduced its output. This is not about renewables. On that day it was wind farms that cut output. On the 3^rd of March when we had a near miss—

Members interjecting:

The SPEAKER: The Treasurer will be seated. The member for Mount Gambier is warned for the second and final time and the member for Newland is called to order. Treasurer.

The Hon. A. KOUTSANTONIS: Dr Marxsen stated:

On the 3^rd of March when we had a near miss, it was gas generators. Back in 2003 and 2004 it was a mix of coal generators and gas generators. With the single exception of the 3^rd of March near-miss, all of these events caused massive disruption to South Australia's electricity supply. The single common element was failure of generators to ride through grid voltage disturbances because of complex software control systems.

They are direct quotes from the head of the national market operator. I must say that I am encouraged by AEMO's learnings of the event and confident that our energy plan is well on track to curtail issues of stability and system security identified in this final report.

AEMO has now completed its investigations into the 28 September 2016 event. They have pledged to work closely with industry to implement all recommendations outlined in this report. There are 19 recommendations in total, all in various stages of implementation. AEMO's intention is to complete the remaining recommendations by December 2017. I am also looking forward to working constructively with AEMO into the future. Yesterday, I had the honour to meet with their new CEO, Ms Audrey Zibelman, who is a thoroughly impressive individual and is absolutely aligned with this government on improving the current state of the national energy market.