South Australia’s Blackout
The real (unmentioned) issue
by Professor Xu Yi-Chong
The total blackout in South Australia triggered unusual tirades from the Prime Minister, Deputy PM and Senators (including South Australian Independent Senator Nick Xenophon) against the pursuit by state governments of renewable sources of electricity generation. Renewables became an instant target of political bashing because some conservative politicians (who are uncomfortably pressing the PM) want nothing to do with renewables at any cost while others merely grabbed an opportunity for an attack on the opposition.
The blackout was undoubtedly due to the loss of three major 275kV transmission lines north of Adelaide and the collapse of 20 high-voltage towers. Whether there is 40% of electricity generation from renewable sources or no renewables at all, when big towers collapse, the system stops working. That was what happened in January 1998 in Quebec and Ontario, Canada, when an ice storm brought down over 1000 transmission towers, leaving 4–5 million people without electricity in freezing weather, incurring total economic losses of more than US$4 billion. That was also what happened in January 2008 in China when another ice storm brought down transmission lines and towers with direct economic losses of more than $22 billion.
We know to expect that:
- severe weather conditions will happen more frequently than before because of the climate change;
- economic losses of blackouts and brownouts of any scale will be huge; and
- investment in infrastructure can prevent total blackout.
We also know that private firms and public authorities in Australia have invested very little in electrical infrastructure over recent years.
Infrastructure investment required
Many leading Australians have expressed pride in the fact that theirs was one of the first countries to ‘privatise’ public utilities, electricity being one. Instead of investing public money in traditional public utilities − especially transmission and distribution networks which have the nature of public goods (that is the reason they are called public utilities in the first place) − foreign companies, including Chinese, have been invited to invest in our infrastructure. And they have been happy to do so because, as they say, “we can get much higher rate of returns than we can in China.”
But higher rates are available because there is no conditionality on private companies to invest in renewing expensive infrastructure, and certainly no economic incentive to do so. And this is not just an Australian problem but a global one. IEA predicts the world needs a total investment of at least $8.4 trillion in 2015–40 to expand new and refurbish aging transmission and distribution networks to ensure safe, secure and reliable access to electricity (World Energy Outlook 2015). Public goods demand public responsibility.
One energy expert argues that nearly 65% of all energy infrastructure around the world is well beyond its useful life and updating it, especially as world population grows, will cost many trillions.
It seems that no one wants to talk about this even though it is a far graver issue long-term than the percentage or speed of renewables feeding into the grid. If Turnbull, as he has lectured Labor, believes that energy security is the first imperative then he and the government need to address seriously this issue.
Mark Gibbs argues that infrastructure can be made more resilient to the extremes of weather caused by climate change, but infrastructure is very costly, especially in Australian conditions. Gibbs believes we can get smarter to reduce costs, but still someone is going to have to pay for improvements.
It is time for us to accept that private investors, whether foreign or domestic, will not invest in excess capacity (both generation and transmission) to accommodate an increasing share of renewables. There is simply no short- or even medium-term profit in it. By default it will have to be, sooner or later, the responsibility of governments, especially the federal government. But are our governors ready to cease shallow politicking and begin a serious conversation on this? Unfortunately the South Australian incident suggests that it is not even on their radar.
ABOUT THE AUTHOR
Xu Yi-Chong is a Professor in the Centre for Governance and Public Policy and the School of Government and International Relations. Her research expertise is in the areas of energy security; international organisations; nuclear policy in China and elsewhere.
