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SA electricity package positive for SA but exposes national market failure and urgent need for national reform

"The energy policies announced by the South Australian Government today will help the State weather its urgent energy security challenge, but they are not a substitute for the coordinated national reform that our energy markets desperately need," Australian Industry Group Chief Executive, Innes Willox, said today.

"While most of the rest of Australia is starting to grapple with higher energy prices and more vulnerable supply, SA has been hit first and hard. Jobs and investment are under serious threat across the State and the country if extreme prices and uncertain supply persist.

"The SA Government package is a serious response to the State's problems. At first blush these initiatives will help stabilize SA's segment of the electricity market by delivering extra energy supply at critical times, along with inertia and frequency control. Importantly, they will make use of SA's full range of technological options, from its gas resources to renewables, energy storage and more.

"It is less clear how much these initiatives will help with SA's other energy crisis, affordability. That will be more heavily shaped by decisions in other States and at the national level. This is particularly true for gas, where the effect of SA's sensible production incentives may be lost if Victoria and others remain closed to gas development.

"Emergency powers to intervene in market operation decisions are at first glance understandable given recent events, but we do not want a result where market governance is confused and the national character of our market is lost.  The current National Electricity Market is in trouble, particularly in SA, but it is not clear that State emergency powers are the answer. The wider systemic impacts of State policies on price and supply elsewhere also need to be considered.

"National reform of energy markets and climate policy is more urgent than ever. For instance, SA's fund for grid-scale batteries and other energy projects is positive, but the Finkel Review of Energy Security is considering reforms that would unlock even more investment.

"It is time for all sides and levels of Australian politics to feel the same urgency as South Australians do. We need to agree national, durable and efficient policies for an energy system that gives Australia a competitive advantage in energy all the way through a global transition towards net zero emissions," Mr Willox said.

Media Enquiries: Tony Melville – 0419 190 347