Parliamentary Committees

Select Committee on Statewide Electricity Blackout and Subsequent Power Outages

The Hon. D.W. RIDGWAY (Leader of the Opposition) (16:03): I move:

That the final report of the select committee be noted.

It is with pleasure that I present the final report of this select committee. Members would know that it was established earlier in the year—I think it was around about the beginning of March this particular calendar year—as a result of the statewide blackout we had on 28 September 2016, which I think everybody thought might have just been a once-in-a-lifetime blackout, and then of course we had subsequent blackouts and power disruptions on 27 and 28 December, and also on 8 February 2017. I think everybody thought, 'Obviously there is something that needs a closer look.'

Before I get into the main body of my contribution, I would like to thank the members of the committee: the Hon. Mark Parnell, the Hon. Gail Gago, the Hon. Terry Stephens and the Hon. Robert Brokenshire. Unfortunately, there was a clash with the Natural Resources Management Committee meeting, so the Hon. Robert Brokenshire came to part of a couple of meetings early in the piece. He did not formally resign from the committee, but also did not attend any other meetings. It is unfortunate, but I guess he has a bit of an interest in the proceedings.

I also thank the committee secretary, Ms Leslie Guy, and the committee research officer, Ms Christine Bierbaum. Without those expert people to bring the evidence together and formulate it into a report, the committee would be all the poorer. I would also like to thank all the people and companies who made submissions. All the people who were invited to give evidence and did so were an important part of the whole process.

I will briefly go through the terms of reference: the causes of the blackout, delays in recovering electricity supply, credible warnings of potential for such an event, the cost to households and businesses, the lessons learned from the blackout, the power outages on 27 and 28 December and 8 February that we added to the terms of reference, the role of power companies in the state and national electricity regulators, and the reforms that would improve electricity reliability and affordability in South Australia whilst reducing carbon emissions, which I think is one that the Hon. Mark Parnell put forward. We also included the state electricity plan, because the government released that while we were taking evidence, and any other relevant matters.

I think the report speaks for itself. I know we have a very large day of private members' business ahead of us, but there are a couple of points I would like to make on the terms of reference. Regarding the causes of the blackout, there has been quite a lot of discussion and debate around whether it was because we had renewable energy or because we did not have a coal-fired power station anymore, or because we lost three of the four main transmission lines going to the north of the state, or because the ride-through settings were wrong on the wind farms. It does not matter which side of the argument you are on, you can find evidence to suggest that one of those things was a factor.

Clearly the ride-through settings on the wind farms were an issue that nobody knew much about. One of the recommendations is that AEMO should have known about it and should have made it its business to know about it. Certainly, the fact that they stopped producing electricity at the wind farms when the Heywood interconnector was at almost its maximum meant that we had no other supply and the system tripped. As I said, you could spend half a day arguing over exactly what the cause was and which particular component of our electricity system was at fault, certainly with some of the other events when we had load shedding. SA Power Networks probably got it wrong in the February event.

Nonetheless, the first reference was the causes of the blackout. Clearly, we had a very high demand. The Heywood interconnector was at its maximum and we no longer had a coal-fired power station, so there was a good case to say that the north and the west of the state may have stayed on, and if they did not stay on they could have been restored much more quickly.

Of course, the ride-through fault settings on the wind farms were set to such a point that they could not withstand the faults they were getting with the transmission lines going out. They were shorting to earth, so they shut down to protect the wind farms. So, there are a number of reasons, and maybe it was the fragility of our system that led to it, but there was no clear bit of evidence that said it was one thing that was the reason that it all went black on us on that particular night.

With regard to delays in recovering electricity supply, the system restart is quite a difficult mechanism to manage. All evidence we received suggested that if the Northern power station had still been operating, the north and the west of the state—Roxby Downs, Arrium and all the ones down to Port Lincoln and other areas—would have been much quicker to start. We may have been able to restart the rest of the state a bit more quickly, but certainly that part of the state would have been back on supply very quickly. The government took a decision to close that power station. I think it was the Hon. Mark Parnell who talked about Robert Mugabe last night. Was it Robert Mugabe, Mark Parnell?

The Hon. M.C. Parnell: Yes.

The Hon. D.W. RIDGWAY: Yes, and how he was gaoled for blowing up a power station in another country.

The Hon. M.C. Parnell: No, that was Nelson Mandela.

The Hon. D.W. RIDGWAY: That was Nelson Mandela, not Robert Mugabe. It is interesting that we had a government blow up a power station here in the last couple of years, so maybe it might be worth considering that as a place where we could punish them just for a week or two! There is good evidence to suggest that if the Northern power station were still operating, the extent of the statewide blackout would not have been as great and as far-reaching as it was.

The next term of reference was 'Credible warnings of the potential for such an event'. There were freak weather conditions and there is certainly evidence to suggest that tornados tore down transmission lines. They were quite exceptional and that clearly had a significant impact on the transmission network.

We also concluded that there were some changing factors in the market with less synchronous generation, and our market was getting more and more fragile. We certainly had a lot of warnings. When the Hon. Gail Gago, the Hon. Tom Koutsantonis and I were on the ERD committee in 2003, we had evidence back then to suggest that if you had too much renewable and intermittent energy, you risked the stability of the network.

There was some suggestion that the love affair that we have with renewable energy also left our state somewhat exposed during this particular event. There were lots of warnings over the last decade that we were perhaps getting the balance wrong. The government currently talks about transitioning to a low-carbon future. Perhaps that transition should have started differently, not just blowing up the power station and hoping like hell we can get through.

AEMO stated that the planned closure of the Northern power station in May 2016 would create significant challenges for transmission networks and voltage control in the Upper North and Eyre Peninsula regions of South Australia. The Australian Energy Market Operator warned that the removal of that power station was going to create some problems across the rest of the state, and suggested that we saw that with the poor ability to restart the system.

AEMO also went on to say that the likelihood of widespread or regional blackouts after non-credible events increases as the region becomes more reliant on energy imports over the interconnector, and local wind and rooftop photovoltaic generation. The warnings were there that with more intermittent and renewable energy and less base-load generation, and also with the Heywood interconnector being at its maximum, we were getting ourselves into a place where we were vulnerable, and if something went wrong, we would be unable to restart and provide electricity supply to South Australian consumers. There were plenty of credible warnings.

Term of reference (d) was 'Costs to households, businesses and the South Australian economy as a whole'. Initially, Business SA estimated it could be $367 million and they revised that figure upward to $450 million, so $400 million to $450 million is a significant impost on South Australian business and I think that should be taken into consideration. The government has just announced that they could have kept that Northern power station open for $8 million a year for three years. That may not have totally solved the problem or stopped the statewide blackout, but it certainly would have meant that we could have started the north and the west much more quickly, and I am sure that figure of $450 million would have been significantly less.

There are a couple of other terms of reference I would like to address before talking to some of the recommendations. I think we have all learnt some pretty valuable lessons from the blackout. We need a much more resilient and robust network, and that is the focus of the government's electricity plan. Clearly, it is the opposition's electricity plan, going to the next election, that we do not have the Northern power station. While I will continue to complain about it, it is gone. We have seen it blown up. It is now an opportunity to say, 'What is the way forward?' I think the community does not want to see itself exposed to being blacked out.

We are living in a modern, First World country and in my view the lessons learnt are that the community is very upset with losing the supply. It is pretty upset with the cost of electricity, but in the time of an election campaign reliability and price are the two biggest issues, and I think the events of the last two or three lots of blackouts have highlighted or focused the community's interest on reliable electricity. In a modern, Western society when you pay the top premium price you usually get the best quality service; we do pay a premium price but, sadly, as was shown last year with those blackout events, we do not get that premium quality service.

Just one other point, as a select committee we had a quick look at the state energy plan. I do not particularly want to delay the chamber any more, but I do want to make a couple of comments about the state energy plan. We took a lot of evidence from the government agency as well as from a number of other stakeholders and, interestingly, there was not one bit of evidence, not one shred of evidence, that this would have any impact on the cost of electricity. That is an interesting thought.

Clearly the government has focused on and panicked about reliability of supply but, as I said, you should go doorknocking. Everyone should; a lot of members in this place do but a lot do not, and they should go out and actually look into the eyes of the mums and dads, and especially the pensioners, who simply cannot afford their electricity bills. So while the government talks about an electricity plan that gives some sense of reliability, it has not addressed pricing. There was no evidence given to the select committee that there would be any downward pressure on price from the state government energy plan.

As I said, we have a large amount of work ahead of us today, but I will quickly address some of the recommendations. Despite it being a select committee that did not have a political party majority we tried to work through the recommendations, and it was interesting that we were able to come up with some that we all thought were worth pursuing. I will briefly run through a couple of them.

The first is that the South Australian government continues to contribute to a cohesive national policy on energy and climate change and encourages a coordinated, consistent approach by all governments in the design and operation of energy markets. I would like this government and any future government, whoever it is, to say that we should be looking at that sort of cohesive national policy. That is something that has been missing and I am pleased that the committee, as a whole, has recommended that.

The second recommendation is that the South Australian government continues its work with other jurisdictions to ensure that the NEM has adequately incentivised, efficient and timely investment in low-emission electricity that meets system strengths and security requirements. Again, I think we all accept that renewable energy is here to stay, it is probably going to be an important part of our energy mix going forward, but we have to make sure that the National Electricity Market works properly.

South Australia is the lead legislator, and we have had nearly 16 years of Labor government as the lead legislator, yet at times the Premier and the Minister for Energy have said, 'Oh, the system is broken.' My understanding of it is that they pretty much have their levers on the system, and they clearly have not been playing the leadership role that the state government should.

Something I think that is quite telling is that the South Australian government should abandon the idea of a new state-owned power station. The state government decision to install emergency backup diesel generation over the next two summers is an appropriate response to the potential short-term shortfalls in the electricity supply; however, the government should now prioritise other electricity supply solutions which make these emergency generators redundant within the shortest possible time frame.

It is not often that the Greens and the Liberal Party come together on recommendations, and the Hon. Mark Parnell will say that he wants to abandon it for a different reason to the Liberal Party, but I think we want to abandon it for similar reasons. However, it is interesting that the majority of the committee, and I am sure the Hon. Robert Brokenshire would have been there, said that the idea of buying this new—

The Hon. G.E. Gago: He was never there. He didn't turn up for one meeting.

The Hon. D.W. RIDGWAY: If he had been there I am sure—

The Hon. G.E. Gago: He never turned up for one meeting.

The Hon. D.W. RIDGWAY: No—well, he did turn up to some of the meetings, but perhaps you were not there. It is a shame when members interject about their attendance because the Hon. Gail Gago missed a couple of meetings as well. In regard to investing in a power station, it cost $110 million to lease it. I still cannot understand how you enter into an arrangement where you are going to rent something for a couple of years and if it is any good you are going to buy it. The government has gone and bought it, or agreed to buy it, before they have even tried it. Only the Labor Party would actually do that, I would think. It costs $300-odd million to buy it. That is 300 million reasons why the Greens should not preference the Labor Party at the next election.

The Hon. M.C. Parnell interjecting:

The Hon. D.W. RIDGWAY: The Hon. Mark Parnell throws his head in the air. He has his little deal with the Labor Party on the GM moratorium The very least the Greens could do is have the courage of their convictions and not preference the Labor Party when it comes to this part. It was something he felt strongly about. I would hope that the Greens see some merit in my suggestion in regard to the 300 million reasons why they should not preference the Labor Party.

The next recommendation was about the benefits of interconnection. Undoubtedly, something that came out of the select committee from a number of witnesses was the benefits of being better interconnected. Everywhere in Europe, they talk about countries that have high penetration in renewable energy but they do not have blackouts and that is because pretty much all those countries are well interconnected.

In fact, one of the figures that was suggested at one stage—and I will use South Australia as an example—if you have a rough average daily load on an average day of about 1,500 megawatts, you should have 1,500 megawatts of interconnection so that you can actually supply your average daily load via interconnections. It is a bit like building an irrigation system to make sure you can meet the needs of the plants at any given time.

I know that the reason the Hon. Mark Parnell wants to abandon the power station is so that we can have more renewable energy. Partly, having a larger interconnector to New South Wales means that you do have the benefit of energy flowing both ways. It gives us the benefit of having some backup from New South Wales during times of shortage and it also gives us a really good opportunity to export green energy to the Eastern States.

There was a little bit of discussion around that recommendation. There was a bit of debate. You cannot have it both ways. You cannot have an interconnector that flows only one way. If you want the benefit of exporting green electricity, you have to have it there to bring in electricity when the wind does not blow and the sun does not shine. Moving on, I was pleased to see that ElectraNet has issued some statements to say that it looks like the Eyre Peninsula network is going to be upgraded. That was a recommendation the committee was going to pursue, so I am pleased to see that that—

The Hon. M.C. Parnell: We made them do it.

The Hon. D.W. RIDGWAY: We made them do it. We forced them to do it. I am not sure that a parliamentary select committee is going to force anything much, but it was pleasing to see that a recommendation we came up with was one the industry has backed. I look forward to that with some interest. I know they are doing their regulated infrastructure test on the interconnector to New South Wales and my understanding is that there will be some preliminary draft report, maybe towards the end of December, and then a final report earlier next year.

I have some hope that we get a positive recommendation there because the evidence we got was, I think, a PwC report that it would put about $108 downward pressure on consumer prices annually at the cost of about $8 per consumer. If you take the $8 off, it is about $100 a year benefit. That is over 40 years, but those big bits of regulated infrastructure are paid for over a very long period of time, so I think there are some benefits from that.

I just want to touch quickly on some national reforms we looked at. There was one around the South Australian government considering recommendations on this and other relevant reviews into reliability and security and the security of South Australia's electricity supply in formulating the state's energy policy. I think it is important that we make sure we have good consistent policy. I wanted to make sure that the government considered these recommendations in their deliberations over our energy policy. I think it is important that, while the government wants to go it alone as a state—certainly, it is not my view, and not shared by other committee members perhaps—you have to make sure that whatever policy formations you have fit in with the national market.

There are a few other recommendations in relation to the national reforms. There is the one around having greater clarity and transparency regarding responsibilities held by different levels of government, network operators, network participants and generators. That was a bit of a revelation to me. The number of layers of bureaucracy in our energy market is quite large. I wonder how much duplication there is across all these different layers of bureaucracy. It is something that has evolved over a long period of time with all the member states. We are probably never going to be doing anything about it, but I think it is important that we recognise that, wherever possible, they should look to remove that level of duplication. I have a couple of quick ones on the national recommendations and reforms:

AEMO improve its collection of relevant technical information from generators in order to prepare for possible issues that affect the stability of the grid. This includes information about connection arrangements, power output levels, risks and fault procedures. AEMO should use this information to correctly inform its modelling. It was somewhat concerning that AEMO did not have sufficient information available to it to predict the disconnection of wind farms during the September 2016 storms. It now seems that whilst AEMO did know about ride-through settings, it was unaware of other settings that resulted in disconnection…

I think it is beholden on AEMO to make sure they are aware of all of the technical aspects. Maybe this all came as a bit of a shock and they are probably doing a lot better now, but it is certainly something we needed to make sure that they focused on. Another one was:

AEMO pay closer attention to local weather conditions and seek to secure emergency electricity supplies from generators or storage much earlier in the process. AEMO’s policies should recognise the different constraints that different types of generation exhibit and the amount of time it takes to bring generation on-line.

One that the Hon. Gail Gago suggested, and I think we all agreed with, was:

Telecommunication companies be required to keep in place more effective power back-up arrangements which ensure that communications work in times of blackouts.

I know that for telecommunication companies it was almost unheard of to have a system black event, but clearly there were some issues in regional South Australia with the backup power for mobile phone towers going down and therefore people lost the use of their mobile phone. Members would know that the old copper wire network worked when you did not have electricity. Now, of course, in this modern time when everything relies on electricity, when you run out of it things do not work. Just quickly, four recommendations that I put in as my little personal statement:

The South Australian Government ensures that action it takes to improve power system security and reliability in South Australia is the most cost-effective and imposes the lowest possible cost on electricity consumers.

It is something that the rest of the committee could not agree with me on, but, as I said earlier, you go and talk to the consumers out on the street and the number one issue is the cost of electricity. They are almost begging us, 'Whatever you can do, please, please give us some cheaper electricity.' I think that is a really important thing. I was disappointed that the committee would not share those views with me. My second point is:

Australian governments support the development of national policy frameworks to achieve objectives for electricity system security, reliability, affordability and emissions which are technology neutral and promote innovation.

Clearly, other members wanted not to have it technology neutral. Again, affordable, reliable, green energy is, I think, the order wanted by most people on my side of politics. They want it affordable, they absolutely want it reliable and as green as you can possibly have it. I find it bizarre that people would say, 'Actually, we don't care if it's all green and therefore really expensive and maybe not as reliable.' I think you have to have a mix there. Certainly, I was disappointed I could not get support for that particular recommendation.

Interestingly, I recently went to an opening of a green energy business in Adelaide and Mr Basil Scarsella, the boss of UK Power Networks, was there. He said, 'Reliable, affordable, green energy—you cannot have those three things in the one statement. You can have two of them, but you can't have three.' It is interesting. He runs one of the biggest power networks in the world and they are shifting away from a fair bit of their fossil fuel energy; nonetheless, he was saying that it is really difficult, even right now, to have those three things in one sentence.

The second to last recommendation to the South Australian government is, through its membership of the COAG Energy Council, to work to ensure that regulatory arrangements for the energy industry, including the division of roles within the various state and national regulators, operate as efficiently as possible to achieve agreed national energy objectives. Of course, members here did not want it. I could not get support from the rest of the committee because, of course, they wanted to go it alone and do their own thing. Clearly, we are in a National Electricity Market. We are a small player. Everywhere else in the world, it says you have to be better interconnected, you have to be part of a national market. They have made a decision they did not want to support that.

The final recommendation was that the approach to system planning, renewables and carbon reduction be based on national approaches. Certainly, it is my side of politics' view that you cannot have different state emission targets and different parameters in which to operate. You have a National Electricity Market, which should be agreed upon and should be done with a national approach.

With those few words, I recommend the report to the chamber. I thank all the members for their time in coming and listening to the evidence. It was conducted in a very earnest and good way. We tried to probe the issues and come up with a list of recommendations that give the government, and especially the new government after the next election, whoever that may be, some clear direction from the select committee. I recommend the report to the chamber.

The Hon. M.C. PARNELL (16:31): I join with the Hon. David Ridgway to thank the committee members for their work on this committee and for helping to pull together a professional and useful report. I would also like to add my thanks to Ms Leslie Guy, the committee secretary, and also to the committee's researcher, Christine Bierbaum, who I think might be new to this game but she produced a most excellent report, as if she had been writing them forever, that required very little editing. I think she has been a good find for parliamentary committees.

The Hon. David Ridgway in his contribution, citing an industry representative as his expert said, 'You can't have reliable, affordable and green. You only get two out of the three.' I think that is at the heart of where we part company because you can have all three, and you must have all three. In this age, when we are facing a climate emergency, we must have all three.

In relation to the specific work of the committee, despite attempts by some in the community to blame renewable energy for the statewide blackout on 28 September last year, and also the Adelaide load-shedding incident on 8 February this year, it was clear that in both cases other factors were to blame. Violent September storms last year, including tornadoes, destroyed important transmission infrastructure and this was ultimately what caused South Australia to experience a system black on 28 September.

In relation to the February 2017 heatwave, the load-shedding event, the failure of existing gas generators to respond to the conditions was absolutely critical. Together with the failure of regulators to ensure that sufficient generation was available, these two factors were ultimately responsible—not renewable energy. The unfortunate situation whereby three times as many customers were subjected to load shedding than was necessary can be sheeted home squarely to SA Power Networks' software and, again, this was not due to renewable energy.

Nevertheless, South Australia's changing energy mix in response to environmental imperatives does require changes to infrastructure, regulation and management of the electricity system to ensure security and reliability. In the past, limits on the amount of intermittent renewable generation in the network were thought to be an insurmountable barrier to those industries. However, today, these issues are being resolved with new storage technologies. These new technologies will allow electricity to flow reliably and affordably to consumers regardless of the time of day or the strength of the wind. In the first instance, batteries are likely to provide the needed storage; however, planning for solar thermal and pumped hydro-storage is also well underway.

In this new environment, the objective of moving South Australia to 100 per cent renewable energy is achievable without compromising system reliability, security and affordability for consumers. Calls to maintain South Australia's reliance on fossil fuel generation are misplaced and ultimately only serve the interests of the incumbent fossil fuel generators at the expense of the broader community and at the expense of the environment, particularly the climate.

The age of coal is over and the age of renewables is well underway. South Australia is particularly vulnerable to policies that favour fossil fuel generators because we are already leading the nation in renewable energy and our state is showing that transition to 100 per cent renewable energy is possible without sacrificing reliability, security or affordability. In short, discriminating against renewable energy is bad business for South Australia.

The Hon. David Ridgway referred to the recommendations on which the committee was agreed and I thank him for doing that. I do not need to go back over that territory, but there were a number of other recommendations that the Greens put forward that did not have universal support and I want to briefly outline what some of those were.

In relation to reforms at the federal level, there were a number of issues involving the Australian Energy Market Operator and some of the research that they should be doing to make sure that our grid is of 21^st-century standard. They need to look carefully at how batteries can be used to stabilise the network. They need to look at having a fast frequency response market, and there are other initiatives as well. We are pleased that the Australian Energy Market Commission that makes the rules has finally agreed to the five-minute settlement rule, which is going to provide a level playing field so that the gas and coal-fired generators do not continue to game the system.

One particular recommendation from the Greens that is very timely now is that the federal government's proposed National Energy Guarantee, the so-called NEG, should be abandoned. Whilst the committee did not take specific evidence in relation to that, the arguments are pretty much the same as arguments in relation to a state scheme, which I will come to in a minute. Certainly, the National Energy Guarantee is bad for South Australia. I am very pleased that the minister Koutsantonis is out there on the national stage saying that it is bad for South Australia. I am also pleased that he is joined by another energy minister from the ACT, a Greens energy minister, lining up with minister Koutsantonis against the fossil fuel industry. That has been a good development.

In terms of particular South Australian reforms, there are four things I would like to touch on very briefly. The first is that increased renewable energy generation in South Australia should be encouraged through appropriate policy settings and public investment. Those policy settings do include the planning system, and I just make the observation that about half an hour ago I lodged my submission against 720 megawatts of brand-new fossil fuel power generation, which I believe is completely unnecessary and completely at odds with a range of government strategies that promote renewable energy and protection of the climate.

The recent history of the federal government is one of policy failure, and we need to make sure that South Australia steps up and fills the breach. We know that as more coal-fired power stations are taken off-line in Victoria, New South Wales and Queensland in coming years, it will be important to construct new generating capacity within the National Electricity Market. South Australia is well placed to take advantage of our excellent wind and solar resources, and this is the logical place to construct new generation infrastructure.

The second Greens recommendation was that increased energy storage in South Australia should be prioritised in parallel with new generation capacity. As the proportion of intermittent generation increases, we are going to need more investment in energy storage in order to balance out the use over the day or between periods of high and low wind activity. Storage will also be needed for ancillary services, including frequency control.

The third Greens recommendation is that we should develop plans for capitalising on excess electricity generation. The Hon. David Ridgway referred to this in his remarks because, clearly one thing that you can do if you have excess generating capacity, especially renewable capacity, is export it to other states.

That does speak in favour of an interconnector, but it is not the only thing that you can do with excess generation. You can also store that excess in batteries. You can use pumped hydro or other storage methods. You can create a new hydrogen manufacturing industry or convert energy into other energy services, or you could promote new energy-intensive industries to come to South Australia. So, there is a range of things we could do.

The Greens' position in relation to the interconnector is that we think it is seriously worth a good look. We need to do a proper cost-benefit analysis, but it is not the only way to deal with excess electricity. There are some concerns that we do not want to end up propping up ancient old coal-fired power stations in the Eastern States with a facility that will just allow them to dump more dirty energy on the South Australian market.

The final additional recommendation that I have made is that the proposed state energy security target regulations should be abandoned. The government has pretty much abandoned them. They delayed their implementation for six months, then delayed the implementation for another two years. They have effectively been abandoned, but it is important for business confidence that the government come out and say that they will not go ahead with those regulations.

I was pleased to be part of this committee. I think we have done some good work. We have come up with some good recommendations, but I still somewhat despair that, when push comes to shove, the argument can degenerate into a pretty mindless discussion around renewable energy and how it cannot possibly meet the needs of the future. Well, it is the future. It is here to stay, and we have the means and the technology to make it work, to make it reliable, affordable and sustainable, and that is the challenge that is before us.

I think the committee has gone part way, but it will be up to future governments to make sure that the policy settings are put in place to deal with the climate emergency and to make sure that South Australia leads the nation in becoming the first 100 per cent renewable state in this country.

The Hon. G.E. GAGO (16:41): I rise to support this report, and of course my attached minority statement. On 28 September 2016, South Australia experienced a statewide power outage. Since then, there has been decisive action taken by this government, including a number of investigations into the causes of the power outage and work done to prevent such an outage from re-occurring.

The investigations included the AEMO review, Burns review, Finkel review, ESCOSA review and also the introduction of the Labor government's new $550 million energy plan. It was disgraceful to note that some, particularly the Turnbull Liberal government, took advantage of South Australia's devastating blackout as a political opportunity to advance anti-climate change and pro-coal agendas.

The evidence given to the committee has been quite clear regarding the cause of the statewide power outage on 28 September 2016. Violent September storms, that included unforeseen and unpredictable tornadoes, destroyed important transmission infrastructure, which caused the Heywood interconnector to trip in response to overloading.

These storms caused serious damage in various parts of the state, and the damage not only created the power outage but also contributed to a delay in returning power to the whole of the state as downed lines and damaged infrastructure had to be located and repaired, and this was done under extremely difficult circumstances. The statewide blackout had a devastating impact on South Australia, with an estimated total cost to South Australian businesses of somewhere between $380 million and $450 million, with the worst impact felt by the regions, particularly Eyre Peninsula.

In regard to the heatwave load-shedding incident experienced in February 2017, it was a failure of existing gas generators and regulators that led to the loss of power connection. Additionally, the excess shedding was a result of a fault in the SA Power Networks software, which caused three times the required number of customers being disconnected. It was also clear from the evidence that AEMO and other energy regulators have lagged behind in their responses to our changing energy needs and uses.

Although regulators' actions around both the statewide outage and the excessive load shedding complied at the time with current regulation parameters, the regulations had not been reviewed and updated in light of climate change and a predicted increase in adverse weather events, nor had any practical steps been implemented to offset the increased risk to power systems due to South Australia's Northern coal power station being decommissioned.

The regulators knew about those matters. They knew well in advance and yet, as I said, no review of their regulations or the parameters of their risk assessment had been done to accommodate those sorts of changes. The increase in risk of adverse and extreme weather events driven by climate change should have caused AEMO and other regulators to review their rules in preparation for the increased likelihood of severe storm events such as those experienced in September 2016 and heatwaves like those in February 2017.

AEMO must improve its collection of relevant technical information from generators in order to prepare for possible issues that affect the stability of the grid. This includes information about connection arrangements, power output levels, and risk and fault procedures. AEMO did not have sufficient information available about the very conservative fault ride-through settings, which resulted in the disconnection of some wind farms during the September 2016 storms. These settings have since been changed, but AEMO had a duty to be aware of them at the time.

The failure of existing gas generators to respond to the February heatwave highlights a need for the new temporary generators that the SA Labor government has invested in to help secure our energy needs and prevent this kind of load shedding, particularly during the coming summer. These temporary generators will, in the long term, form a new state-owned gas power station to be used when commercial generators fail the South Australian public, as has occurred previously. By maintaining the state-owned generators as a fallback, the South Australian Labor government will help provide energy security to thousands of South Australian homes and businesses and do so without discouraging further investment in our energy market.

Our changing energy mix due to environmental need will require changes to infrastructure, regulation and management of our electricity system to ensure security and reliability. Through new and emerging technology, such as the battery storage that South Australia is investing in and future planning for solar thermal and pumped hydro, the confines created by intermittent renewable energy generation are certainly being reduced significantly. This opens up a wide area of growth in renewable industries and will ensure that consumers can access reliable and affordable renewable energy at all times.

The experience of the statewide blackout in September 2016 has enabled the industry and regulators to identify a number of improvements that could be made in the short and long term to enable better use of information to predict and prepare for such events, better manage the performance of the power system leading up to and during such events, and improve the restoration of power after such events. Calls to maintain or increase our dependence on fossil fuels in the long term, I agree with the Hon. Mark Parnell, are destructive and misplaced. South Australia is leading the nation by demonstrating that a transition to 50 per cent renewable energy sources can be reliable, secure and affordable.

The decision of Alinta Energy to close the Port Augusta power station was based purely on market conditions, as they assessed its operation to be uneconomical. They wanted the state government to subsidise them to remain open. Subsidisation is not a viable solution for a sustainable South Australian electricity supply and would have opened up further issues and knock-on effects with other power stations in the state, such as Torrens Island.

Calls for South Australia to rush into investing in another interconnector to the Eastern States are, I believe, also misguided. The state government has commissioned a study with ElectraNet to investigate greater interconnection possibilities; however, more analysis is needed on costs and the potential negative effects of increased interconnection on South Australia's current fleet of generators.

As both the Hon. David Ridgway and the Hon. Mark Parnell have pointed out, the possible benefits include exporting surplus renewable energy as well as providing a level of protection from local shortages. However, the negatives include high costs and a very lengthy process due to land acquisition and construction. Ultimately, such costs are passed on to consumers, and there is also the potential for generator displacement of Indigenous generators, possibly resulting in their reduction and closure. Any further consideration should await the results of a regulatory investment test examining the possibility of an interconnector between SA and New South Wales.

The interconnector would also fail to enhance our energy independence and further increase the vulnerability of SA's power security as it would increase our reliance on excess power generation by the Eastern States. The federal government's lack of either an energy or a climate change policy at the time of the blackout created uncertainty and a lack of confidence for potential investors in the energy market. The federal government was nothing short of derelict in its responsibility for providing those national framework policies so that investors would have some certainty about their future. The lead times for some of these projects are around 30 years, so the federal Liberal government really put us on the back foot and set us back a long way.

The state government has worked hard to draw investors into South Australia to increase the security and competitiveness of South Australia's energy grid, but the lack of a clear and cohesive federal policy has been a hindrance, and it remains so. The federal government's recently announced NEG—that was not part of our evidence; it has come out since then—does not give South Australian investors the certainty they need. There has been no detailed modelling, and it is clear from advice from the Energy Security Board that the NEG will decrease competition from renewables, making it even more difficult for renewable generators to enter the market and, therefore, entrench the monopoly of current market powers.

It will delay the price reductions that renewable energy will provide and extend the life of coal plants. This will be bad for South Australia, bad for business and bad for the environment. The federal government should implement an EIS or a CET, rather than the NEG, if they are truly concerned about Australia's future and want to ensure the best energy deal for all Australians.

All Australian governments need to contribute to the creation of a cohesive national policy on energy and climate change. I certainly supported that aspect of the report to ensure that it encourages a coordinated and consistent approach by all governments in the design and operation of energy markets. However, I fail to agree with the Liberal opposition in regard to South Australia absolutely reserving the right to act independently in the state's best interest, when required. We have seen far too many examples where South Australia has been left to fend for itself and look after its own interests.

Time and time again, and just recently with the River Murray, we have seen the federal government and dominant Eastern States' interests absolutely and disdainfully ignoring South Australia's interests. We have been completely overlooked, outvoted and outdone. We must cooperate where we can federally, but we must reserve the right to protect South Australia's interests when the federal government and the Eastern States let us down.

I encourage the South Australian government to continue to work with other jurisdictions to ensure that the NEM adequately incentivises efficient and timely investment in low emission electricity supply, which meets system strength and security requirements. This work should ensure we have a more reliable, secure and affordable energy market. I agree with the Hon. Mark Parnell that we can have all three things and we should not sell this state or nation short by saying that we are only allowed two out of three. It is a bit like offering us the Mazda.

The energy market will reduce carbon emissions and help Australia to meet our Paris climate change commitments. This process should also include updating and introducing market rules and regulations to support and firm up renewable generation and provide a framework to support the transition to renewable through a national scheme such as an EIS or a CET. Australian governments should work with the industry to develop a better understanding of the impacts of changes in energy technology on power system security and stability. National and state electricity regulators, as I said, should be more responsive to technological and other changes which may affect efficient operation of the NEM.

With the changes already implemented by industry as a result of many reports that have already been completed and significant parts of them implemented, planned future changes that have come from recommendations from those reports, and the new SA government energy policy, I am confident that a statewide blackout such as the one experienced last year will never occur again. The South Australian Labor government's new energy plan will help South Australia develop a more stable, efficient and affordable energy grid. This plan includes groundbreaking steps like the world's largest lithium ion battery that is being installed in South Australia, new powers which will help bring market control back into SA hands and a new energy security target.

Several witnesses saw this new energy policy as an excellent process to improve energy reliability. I disagree with the Hon. David Ridgway that there was no evidence that the plan would create downward pressure on prices. We did receive evidence. The modelling is very complex, but nevertheless there was very reliable evidence from witnesses to say that the South Australian government's energy plan will actually put downward pressure on price and, more importantly, create jobs. It will guide South Australia to a bright and sustainable future and establish this state as a world leader.

The state government is also using its $150 million Renewable Technology Fund (half loans, half grants) to drive innovation in renewables that can be delivered around the clock. Increasing the capacity of renewable energy means more competition and downward pressure on prices. This will ensure we continue our extraordinary progress towards a clean and secure energy future that uses South Australian resources to benefit South Australian communities. South Australia will have a better, brighter future due to the work done by this Labor government.

I would also like to thank the other committee members, at least those who bothered to turn up. I would like to particularly thank Leslie Guy, our secretary, and a big special mention to Christine Bierbaum, our research officer. The nature of the evidence that we received is highly technical and quite complex and Christine did a wonderful job of putting a very detailed and accurate report together quickly, requiring very few edits. She showed a great deal of expertise and I thank her for her valuable contribution.

Motion carried.