The Hon. D.W. RIDGWAY (Leader of the Opposition) (20:54): I rise to make some brief, but not too brief, comments about the government's Electricity Management (Electricity Supply Emergencies) Amendment Bill. As my colleague the Hon. Rob Lucas has put on the record, the opposition will be supporting this bill. I thought earlier that maybe I would not speak, as we are obviously after dinner and the government wants to rush this through. I asked the messengers for a copy of the bill, but it has been so rushed that we do not even have a Legislative Council copy. I have the House of Assembly copy, which is one of the rare times in this place when we have seen things rushed to this extent. Of course, we did give the undertaking that we would pass it this week, but we are doing it here this evening. As I said, I was not going to talk about this bill.
We are in a First World, modern, sophisticated society, and I have recently had the opportunity to travel to other parts of the world. We claim, and I think rightly so, that Adelaide is one of the best cities in the world, and Lonely Planet says that we are one of the best places to visit. I think Adelaide Oval is in line, or hopefully in line, to win some world award for being a great place. We are constantly being told that where we live—Adelaide in South Australia—is one of the best places in the world.
Yet if I look at the little journey I have been on in my lifetime, Mr Acting President—and I can be so rude to say that probably your lifetime is a little longer than mine, but not as long as some of those opposite, who are quite young and wet behind the ears—I can remember that, as a small child, my family's farm embraced renewable energy. In fact, I could not have a bath at night if we had not had wind for two days because the windmill that pumped out of the underground tank and filled the high tank to give us water in the house would be empty.
This is very sophisticated: we then went to what I think was a small Dunlite generator, which was a little windmill in the backyard that charged some batteries, and that of course was very good renewable energy. Then we became even more sophisticated. We had a Lister diesel engine and some batteries with 32-volt electricity, so we went from no electricity to 32-volt electricity. I can recall that when I was about five or six years old we went onto mains electricity.
The Hon. J.E. Hanson interjecting:
The Hon. D.W. RIDGWAY: An interjection from Mr Hanson. I did not hear that, but obviously it was a sensible interjection.
The ACTING PRESIDENT (Hon. J.S.L. Dawkins): It was out of order.
The Hon. D.W. RIDGWAY: The local Bordertown electricity house had a small generator that supplied electricity, so we had very unreliable renewable electricity and a very unreliable diesel generator with batteries. We had a better system with a local electricity provider, and then, of course, Sir Thomas Playford brought all those small units together to form ETSA. As the Hon. Rob Lucas said, it was a federal Labor government, supported by a state Labor government, that formed the National Electricity Market.
Every time we stepped down the journey, we became more connected to more generation and more capacity. Our system became more secure, and so a National Electricity Market was created. Overseas, in some of the European countries they have a very high penetration of renewable energy. The reason they are so well organised in Europe is that they have a very high level of interconnectivity. If something goes down, the wind does not blow, the sun does not shine, the generator collapses or whatever, there is such a high level of interconnectivity.
That is the journey we have been on in my lifetime. Now we are going the other way. This government's current plan, and this bill, is to remove themselves from the national market, to be an island, if you like, an independent. Everybody is being encouraged to have batteries at home, and some people are talking about diesel generators. In fact, the other day I was speaking to somebody who was building a house, and he talked to his builder in Malvern about putting solar panels on his roof. He said that he has had three people ask him whether it was viable to put diesel generators in their backyards in the suburbs of Adelaide.
Such is the journey we have been on: we have gone full circle. Why have we gone full circle? As the Hon. Rob Lucas said, this government, the members opposite, were sitting there squealing like stuck pigs earlier. You just have to look at the journey we have been on. Fifteen years ago, I was elected to this place. The premier at the time, Mike Rann, promised to build an interconnector to New South Wales. This lot opposite often say that could not happen because of something they claim the previous Liberal government had done.
If that were the case, why would you not start the plan we have seen? I know that they have a very expensive communications plan, this plan they have here. We normally get this stuff posted to us—his good friend Martin Hamilton-Smith sends us his export plan with a glossy—
The ACTING PRESIDENT (Hon. J.S.L. Dawkins): The Hon. Martin Hamilton-Smith.
The Hon. D.W. RIDGWAY: I struggle with that. The Minister for Trade sends us a glossy document. I am surprised—
The Hon. K.J. Maher interjecting:
The ACTING PRESIDENT (Hon. J.S.L. Dawkins): Order! Will the Leader of the Government please be silent.
The Hon. D.W. RIDGWAY: Chuck him out. I am surprised that they have not actually sent us a copy of it. If the interconnector was so important and it was the previous government that thwarted it, why does this plan not have an interconnector? Why did you not start earlier? That is the joke of this government: they have sat on their hands with their head in a bucket of sand for 15 years hoping that these problems would never arise, yet they got warning after warning that it was likely to happen.
It is interesting that they are happy to quote what the previous Liberal government did, but I remind them that the warnings started back in 2003 when, well before they were ministers, the Hon. Gail Gago and the Hon. Tom Koutsantonis were on the ERD Committee. The Hon. Gail Gago rose to be the third most important person in the government, a senior member of cabinet, and the Hon. Tom Koutsantonis still is. I remember that in 2003 Mr Lew Owens, the head of ESCOSA, gave the following evidence:
As you start to increase the quantity of wind power coming into the system up to 100 megawatts, 200 megawatts or whatever, you start to cause instability in the rest of the system. For example, if you had 1,000 megawatts of wind energy coming in, most of the base load stations in South Australia would be required to shut down and then to start them up again is a 10-hour operation.
This was 12 years ago. He went on to say:
There are technical problems and limits with having large amounts of wind power in our distribution and transmission system.
I was on the committee at that time, as I said. Apparently, this warning fell on deaf ears. The Hon. Patrick Conlon, in a submission to the ERD committee in September 2003, said:
To set a state-based renewable energy target may result in higher energy costs for South Australia compared to other states.
The Electricity Supply Industry Planning Council gave the following advice to ESCOSA in April 2005:
Wind development SA at 800 megawatts and at 1,000 megawatt cases pose significant risks to the reliability and security of the South Australian power system.
In 2005, ESCOSA stated:
The reliability and security of the South Australian power system was at significant risk in the absence of upgraded conditions for network connections, high-quality wind forecasting and the proper arrangements to integrate wind generators more fully into the NEM.
And it goes on. The next warning is from the National Institute of Economic Research, in advice to DPC in May 2009:
Limitations on wind power output to ensure South Australia's grid stability is estimated to be associated with about 20 per cent limit on wind capacity.
The view of ESCOSA in 2009 was, as follows:
The commission remains concerned with the long-term safety and reliability of the electricity system in South Australia with 867 megawatts of wind generation.
On 22 June 2011, the then premier Mike Rann said:
We face a number of challenges. Some of these relate to the intermittent nature of wind generation.
A joint AEMO and ElectraNet study in October 2014 stated:
Having a high proportion of wind and photovoltaic generation can present a risk to South Australia if the Heywood interconnector link to Victoria is disconnected at a time when all local conventional synchronous generators are off-line.
Here is another warning from AEMO in October 2015:
The intermittency of wind generation, leading to sudden changes in supply and demand balance, makes managing the power system more challenging.
Finally, a joint AEMO and ElectraNet report in February 2016 stated:
Withdrawal of synchronous generation and the growth of wind and rooftop photovoltaic generation in South Australia is making the power system more susceptible to rapid changes in frequency and to larger frequency deviations following a separation event.
The first of those quotes is from 2016 and last one is from February 2016—over 13 years, the government had all these warnings. I think the people of South Australia are asking themselves: why did we have to fly off the cliff or run into the wall with our power security now, in February 2017, when there were warnings given for the last 13 years?
They claim that they could not build the interconnector because of something the former Liberal government had done before the 2002 election, but they had had warning after warning, and now we see this plan, with batteries, gas-fired power stations and backup diesel generation, which I will come to shortly.
Why have you not done it earlier? Governments are elected to look after and protect the interests of South Australians. The question you have to ask yourself is: why are we now in this set of circumstances where we need emergency legislation to give the minister powers? My colleague, the Hon. Rob Lucas, has quite extensively covered whether we really need them. Of course, the minister claimed that if he had these powers he would have been able to stop the blackout in September last year. However, the question you have to ask yourself is: why did they not do it earlier?
They have all the advice. The advisers are sitting here waiting to try to help the minister answer questions that will be asked of him shortly. There is a lot of advice. There is a lot of expert advice. During question time today, there was some interjection—out of order, I know—about the expert advice they had been given in the preparation of the plan. Where was the expert advice? I have just listed 10 or a dozen occasions where they were told, in the last 13 years, that the system we had was under threat. Why did they not take some measures?
I am not attacking renewable energy per se but, if we are going to go on a journey with a large amount of renewable energy, we need to have a better system to manage it, and we simply have not done that. It is interesting that we currently have a select committee—it may be out of order to refer to select committees in debates—but, in my recollection, I do not think ESCOSA has ever been asked for advice by the government in relation to their renewable energy policy. They have never been asked to comment. The Essential Services Commission of South Australia (ESCOSA) looks after the reliability, price, frequency and supply of essential services, yet they have never been asked.
Not only did the government not heed the warnings from dozens and dozens of experts that the system they were presiding over was at risk and needed some intervention, until we fell off the end of the cliff, but even ESCOSA was never asked. You really have to ask yourself: where on earth has this government been for the last 15 years? Of course, what has happened is that their failure to act and listen to advice and their arrogance in not actually asking ESCOSA has cost every business. I think the cost that Business SA placed on the statewide blackout was some $400 million. That is $400 million that businesses will never, ever get back. It has gone. It is a loss.
We had a significant storm event and minister Koutsantonis says that, if he had had these powers, he would have been able to prevent that blackout. However, at the end of the day, why have we got ourselves in this situation? It beggars belief that we have a modern First World economy—we are sophisticated, well educated and smart people who are proud of our great state—yet we are now in a situation where we are laughed at by the rest of the nation because we have not managed the transition properly.
I know that there was a whole discussion around the power station at Port Augusta. It could have been kept open for another 18 months or so. The government knew about Alinta's plans and knocked them back, yet we only had the crisis plan in February and they started acting on it. Once they knew they could not do a deal with Alinta, why did they not start on the plan at that point? But they did nothing. You have to ask yourself the question: why have they never acted? At the end of the day, it is clearly either arrogance, stupidity, that they just did not understand or, as I suspect, that they just thought, 'We'll just gamble on the future of South Australia and hopefully we will get away with it.'
There are a few questions I would like to ask in the committee stage of the bill regarding the six-point plan that the government released. We know that a $360-million gas generation plant will not be built before this coming summer, as the Hon. Rob Lucas says, and maybe not even before the next summer. Tragically for South Australia, I suspect that if the current government is returned, they may not even build it. Who knows? They cannot even open a hospital that has cost twice as much. How do we know that it is going to be $360 million?
I note in their plan that their final costings and details will be released in the budget. This government has a track record where every project they have ever touched has been more expensive and taken much longer to deliver than planned. In fact, like the hospital, they have not been able to deliver it as yet. I will be interested to see over time the evolution of this $360 million gas plant in the next 340-odd days before the next election.
I am also interested that one of the interim measures is to put diesel generators in our suburbs, in substations near every one of these people in this chamber, everybody who came in today to view in the gallery. A diesel generator is coming to a substation near you. One of the questions that I will be posing to the minister during the committee stage will be about how Tasmania did that when Basslink went down.
What was the cost per megawatt hour of energy produced by diesel generators during the Basslink outage? We know it cost about $50 million to lease and put into place the 200 megawatts of diesel generation, and we think that it was about $14 million in operational costs every three months thereafter. But I want to know the cost per megawatt hour, because in the end that is what is passed on to the consumer. Then, of course, we have a battery system that the Premier says will be the world's largest battery system, and I will have a range of questions in relation to the battery when we get to the committee stage.
I have on my iPad here in the chamber the National Electricity Rules Version 90. I am not sure whether the minister will be able to answer it but I will flag it now so that the adviser knows. They say here that this is the latest electronically available version of the National Electricity Rules, dated 6 April 2017. There are a number of references on the front page to South Australia having amended them and other states having followed, so we all know that we are the lead legislator in this particular case.
If you look at all the warnings the government was given over that 13-year period, couple that with the fact that we are the lead legislator, I think it is a bit rich for the minister and Premier to say that the market is broken, the rules are broken, when we have been at the forefront of it. We have been the lead legislator. There are 1,500 pages or so of them, and I have not had time to read them this afternoon, but in relation to those rules, how do we change them?
The Treasurer and energy minister says the rules are broken and the system is broken. I would like to know how complicated it is to change those rules because clearly if we had had issues along the way, why would we not have been adjusting the rules to match our generation circumstances and these rules so that we were not left exposed, then having to have the issues we have now with this bill and now, as a state, wanting to remove ourselves from the national market and be islanders?
With those few words, I look forward to the committee stage. As I said, I will be interested in looking at how the rules are made and changed and the process we go through for them, and also some of the issues around the cost per megawatt hour of the diesel generators that were available in Tasmania. I am sure in the expert advice that the minister has alluded to during question time, they will have canvassed that, so they will know the sorts of prices they will be exposing the South Australian people to.