As the energy crisis continues to grip Australia’s east coast with consumers being told to curb their consumption and warnings of eclipse Tony Wood, director of the energy program at the Grattan Institute, talks to Michelle Grattan about why this has happened and what can be done to fix the system.
The crisis is unprecedented, Wood says. “We have definitely seen situations where things have become very tight[…] But this kind of long period when we have had major power outages and real stress on the whole system for such a long time has never been seen before. ”
He says the crisis could have been kept to a minimum if previous governments had worked to “address climate change” and “bring about more renewable energy”, as well as all the technology to support a renewable industry.
That said, Wood points out that there are other factors driving the crisis as well.
“We would still have had the weather patterns we had in the south, on the east coast of Australia, which caused all the rain and all the floods from the coal mines that interrupted power supply. And of course we would not have prevented the Ukraine war and we would probably have had real tensions on the gas supply system. “
Wood argues that “things very quickly became very complicated”, as the crisis developed.
On the question of whether the crisis is partly due to power companies playing the system, he says: “I do not honestly think the companies tried to play the system, but I think the commercial arrangements were so complicated [that the Australian Energy Market Operator taking over the system] was the only solution. ”
Some have suggested that the crisis has been exacerbated because many assets have been privatized. Wood disagrees. “I do not think this is a fundamental failure of privatization […] I do think it is a fundamental physical problem and government ownership would not have made much difference. “
“Transitions are always difficult things […] I think we can see where we’re going. It must be a system that is overwhelmingly dominated by renewable energy. ”
“In the short term, we will manage this transition carefully, which means as we adopt more and more renewable energy, we will need some of these coal-fired power stations and gas-fired power stations to maintain the stability and reliability of the system. They should only be there as needed to support that transition. ”
“I have no doubt that by 2050 we can move to net zero. But remember, it will be net zero. It will not be absolute zero. And of course, the sooner we really start to create momentum in that direction, the greater the chance that we will get there and the greater the chance that we will get there without too much cost. ”