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SA power hike will go national without COAG action

"South Australia's energy woes will go national unless the COAG Energy Council follows through on difficult reforms to increase gas supply, reward demand response, and build a more flexible and connected electricity market," Australian Industry Group Chief Executive Innes Willox said today.

"Electricity prices have been rising sharply in South Australia, with wholesale contract prices rising by more than half over the past year, and spot prices rising past $10,000 per megawatt hour in early July. Those prices are the outcome of multiple trends and weak points in our energy system. And many of those factors will affect every State and Territory over time.

"The megatrend here is the rise of renewable energy, buoyed by government policies and the falling costs of wind and solar power. Renewables may well dominate as Australia reduces its greenhouse emissions. But an energy system increasingly based on variable renewables will need flexibility and strong integration. It will have a large role for gas in the near term and for energy storage in the longer term. Our current system falls far short.

"The Council has already identified many of the solutions. But governments have so far been bolder on boosting renewables than on following through on the difficult reforms needed to make an increasingly renewable energy system work.

"The price and availability of gas is a problem in itself, but it also puts heavy pressure on the electricity market where gas-fired power often sets the price. The positive agenda for gas market reform now taking shape will be hamstrung without more investment in gas supply. The States can help by replacing moratoriums on unconventional gas with firm but workable regulation.

"Price shocks can be reduced if demand is as flexible as supply. Reforms on smart metering, time-of-use pricing and a demand response mechanism can no longer stay in the slow lane.

"Much more is needed, from speeding planning for and deployment of energy storage, to better use of regional interconnections, to fresh looks at pro-competitive market rules and the procurement of frequency control services.

"There is growing agreement on the need to review the National Electricity Market, along with supporting policies, in light of the massive changes underway and the need to align energy and climate policies. That work should go ahead alongside immediate efforts to alleviate critical risks to Australia's energy users and the systems that serve them," Mr Willox said.  

A more detailed statement of reform priorities is at this link.

Media Enquiries Tony Melville – 0419 190 347