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House of Assembly - Fifty-Third Parliament, Second Session (53-2)
2016-10-19 Daily Xml
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Whyalla Steelworks

Mr HUGHES (Giles) (15:39): I want to acknowledge the sheer effort put in by the workforce of the Whyalla Steelworks and at Olympic Dam following the power outage on 28 September 2016. In very difficult circumstances, the work performed helped ensure both safety and the avoidance of what could have been far more significant damage to plant and equipment and associated costs. I contrast that conscientious effort on the part of both workforces to the incredibly irresponsible and lazy commentary immediately following the initial storm event that took out three of the four 275 kV transmission lines from Davenport.

The three major transmission lines were taken out over a 43-second period. Without bothering to wait for a detailed analysis of the initial event and the set of cascading events that led to the outage, the usual suspects came out and either directly blamed renewables or attempted to conflate renewables and the outage. Imagine if the police acted the way these people did: turning up at a crime scene, choosing not to investigate and just jumping to a conclusion that suited whatever preconceived notions they had. Fortunately, our police do not act like that, but much of the commentary about our electricity system—a complex system, I would add—follows that script.

The Australian Energy Market Operator has published the preliminary report concerning the events that occurred on 28 September. The preliminary report outlines the events on that day but has held off on a deeper analysis pending the completion of a more detailed study which has been released today. It will be one of a number of studies carried out by a variety of organisations, and those studies will help throw light on the initial storm event and what followed. Those studies will cast far more light than the commentary from the anti-renewables brigade.

There are challenges in transitioning to a far greater proportion of clean energy in our electricity market, and those challenges will be met. The Paris agreement, allied to the massive drop in the cost of clean technology, will continue to displace fossil fuel sources of energy and will inevitably lead to major reform of the National Electricity Market, a market with a regulatory framework that is a creature of the 20th century with its hub-and-spoke, highly centralised form of energy production and distribution.

Our future energy system will be different, with a far greater emphasis on distributed energy, storage, the growth of microgrids and a far greater emphasis on demand management. Over the last five years, the cost of solar has reduced by 80 per cent, with wind by 60 per cent. Cost falls are expected to continue, especially for solar, and will be joined in the coming years by falls in the cost of various storage technologies, including batteries.

There have also been cost falls for solar thermal and in the cogeneration of power from industrial processes. Modern, efficient cogeneration is clearly a very practical and cost-effective option for the Whyalla Steelworks, an option that would enable the steelworks to meet its own need for electricity while potentially providing capacity to export to the grid. In addition to the falling cost of renewables and storage equipment, there has been a major reduction in the cost of capital for clean technologies which significantly benefits renewables compared to fossil fuel sources of energy which have much higher recurrent costs.

As an indicator of where prices are going, the tender for utility-scale solar in Abu Dhabi came in at US42¢ per kilowatt hour and US2.91¢ per kilowatt hour in Chile. Prices are nowhere near that level in Australia but there will be an inevitable big fall in costs and the price of electricity over time. We all want to see affordable and reliable electricity, and most of us want to see clean electricity. Unfortunately, there are some who still prefer dirty electricity.

South Australia is incredibly well placed to benefit from the ongoing fall in renewable costs, which will ultimately lead to lower prices in South Australia. We live in one of the few places in the world that possesses both world-class wind and solar resources, and Eyre Peninsula, the Upper Spencer Gulf and Far North of the state will become a clean energy powerhouse.

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