Well, Australia is facing an energy crisis. It appears to be all our own doing, or perhaps the federal government's doing. The Australian Competition Consumer Commission a Triple C has warned that the Eastern gas market, which connects Adelaide, Darwin, Brisbane, Sydney, Melbourne and Hobart, will face shortages from twenty twenty seven, and that's a year earlier than it had forecast just six months earlier. And added to that, the South Australian government is urgently seeking to have two Mothball diesel powered electricity plants restarted, amid escalating concerns that a new heavy duty power cable will be finished even later. The new South Wales transcrit has admitted it seems to be a situation that is gathering momentum. Tony Wood is the Energy program director for the Gratton Institute. He joins me out Tony, good morning too, and thanks for being with us today.

Well, Australia is facing an energy crisis. It appears to be all our own doing, or perhaps the federal government's doing. The Australian Competition Consumer Commission a Triple C has warned that the Eastern gas market, which connects Adelaide, Darwin, Brisbane, Sydney, Melbourne and Hobart, will face shortages from twenty twenty seven, and that's a year earlier than it had forecast just six months earlier. And added to that, the South Australian government is urgently seeking to have two Mothball diesel powered electricity plants restarted, amid escalating concerns that a new heavy duty power cable will be finished even later. The new South Wales transcrit has admitted it seems to be a situation that is gathering momentum. Tony Wood is the Energy program director for the Gratton Institute. He joins me out Tony, good morning too, and thanks for being with us today.

There's interesting challenges, Yeah.

There's interesting challenges, Yeah.

We certainly do. Look can you make some sense of it? I mean, I think we're all starting to sort of be overwhelmed by the fact that energy prices are going up. It's costing the household more costing business. More and more, we're being told that renewables are the answer, and yet that doesn't seem to be a solution readily. Inside.

We certainly do. Look can you make some sense of it? I mean, I think we're all starting to sort of be overwhelmed by the fact that energy prices are going up. It's costing the household more costing business. More and more, we're being told that renewables are the answer, and yet that doesn't seem to be a solution readily. Inside.

I think part of the somewhat trip. I do not want to trivialize an important question, but I do note that growing up is sometimes difficult, and we're sort of in a stage of this great energy transition where we're in the most difficult time. And I think things are going to improve, but it's pretty hard now because a whole lot of things that you said have come together graand one is that look, South Australia has been leading the country and actually bleeding the world really in moving away from fossil fuels towards renewables, and to some extent, the Australia remained dependent upon from time to time being able to bring electricity in from Victoria when the wind isn't blowing and the sun is in Chining and wind has been the great success story in South Australia and also export to Victoria when the other way around. Right, Well, sometimes we find a situation where the wind isn't blowing in both South Australia and Victoria, and that's where you need to be able to what do you do then, right, So there's then as you connect big power line between Victoria and New South Wales, which would mean a second connection between South Australia and the Eastern States, was originally due to come on probably about now, but unfortunately for a whole lot of delays and the whole lot of costs to blow outs, et cetera, et cetera, we won't see the full capacity now, and some of it maybe by the end of this year, and most of it not until twenty twenty seven. Now that was factored in to some of the projections, which could be okay, but I think we're in a situation where we can hope for the best, but we really need to be planning for the worst so that if things do go wrong that we don't we hope won't, then we've got appropriate backup to do that. And that's why you see this story being talked about in relation to those digel generators and also concerns about where the gas continues to have a role for a while.

I think part of the somewhat trip. I do not want to trivialize an important question, but I do note that growing up is sometimes difficult, and we're sort of in a stage of this great energy transition where we're in the most difficult time. And I think things are going to improve, but it's pretty hard now because a whole lot of things that you said have come together graand one is that look, South Australia has been leading the country and actually bleeding the world really in moving away from fossil fuels towards renewables, and to some extent, the Australia remained dependent upon from time to time being able to bring electricity in from Victoria when the wind isn't blowing and the sun is in Chining and wind has been the great success story in South Australia and also export to Victoria when the other way around. Right, Well, sometimes we find a situation where the wind isn't blowing in both South Australia and Victoria, and that's where you need to be able to what do you do then, right, So there's then as you connect big power line between Victoria and New South Wales, which would mean a second connection between South Australia and the Eastern States, was originally due to come on probably about now, but unfortunately for a whole lot of delays and the whole lot of costs to blow outs, et cetera, et cetera, we won't see the full capacity now, and some of it maybe by the end of this year, and most of it not until twenty twenty seven. Now that was factored in to some of the projections, which could be okay, but I think we're in a situation where we can hope for the best, but we really need to be planning for the worst so that if things do go wrong that we don't we hope won't, then we've got appropriate backup to do that. And that's why you see this story being talked about in relation to those digel generators and also concerns about where the gas continues to have a role for a while.

Yet it's easy to see why people are very concerned, isn't it. I mean, I think philosophically, most people say renewables are the answer, But can we be one hundred percent renewables or do we always need some form of backup?

Yet it's easy to see why people are very concerned, isn't it. I mean, I think philosophically, most people say renewables are the answer, But can we be one hundred percent renewables or do we always need some form of backup?

Well, always is a long time. The thing about wind and solar, which are the round front of the end renewers we're talking about. There have been talked about Loyle mission zero mission technologies before, for example geothermal energy, which never really delivered on its great promise. So wind and solar is what we're talking about, Graham, and they are good in one sense. They are renewable and they also are realized to be low cost when they generate power, so they have to be connected to the grid, and our grid was not built for that sort of situation, so that means a lot more transmission has to be built. They also need to be backed up when the wind isn't blowing, the phone isn't shining. Now across the year, it's very predictable, but it's not predictable on much on a day to day basis. I mean, we know the sun's going to come up and the sun's going to go down every day, but in terms of what sort of weather we're going to have maybe four periods of up to a week or two, it's much less obvious and so we have to plan for those situations, and unfortunately we've got well behind what's necessary to do this. We do need more renewables, we need more transmission, we need storage to back up that when it's not there, and we also need gas for a while yet. How long will need gas for remains to be seen, but I think it's for a while yet.

Well, always is a long time. The thing about wind and solar, which are the round front of the end renewers we're talking about. There have been talked about Loyle mission zero mission technologies before, for example geothermal energy, which never really delivered on its great promise. So wind and solar is what we're talking about, Graham, and they are good in one sense. They are renewable and they also are realized to be low cost when they generate power, so they have to be connected to the grid, and our grid was not built for that sort of situation, so that means a lot more transmission has to be built. They also need to be backed up when the wind isn't blowing, the phone isn't shining. Now across the year, it's very predictable, but it's not predictable on much on a day to day basis. I mean, we know the sun's going to come up and the sun's going to go down every day, but in terms of what sort of weather we're going to have maybe four periods of up to a week or two, it's much less obvious and so we have to plan for those situations, and unfortunately we've got well behind what's necessary to do this. We do need more renewables, we need more transmission, we need storage to back up that when it's not there, and we also need gas for a while yet. How long will need gas for remains to be seen, but I think it's for a while yet.

There's obviously the issue in New South Wales where only last week when it was moderately hot, it was hardly a heat wave, low thirties at best, that the premiere to come out and say, look, turn off your reconditions or turn them down, and don't use your dishwashers, this, that and the other. You know, And in twenty twenty four should we be having to be told these sorts of things.

There's obviously the issue in New South Wales where only last week when it was moderately hot, it was hardly a heat wave, low thirties at best, that the premiere to come out and say, look, turn off your reconditions or turn them down, and don't use your dishwashers, this, that and the other. You know, And in twenty twenty four should we be having to be told these sorts of things.

No, there's a simple answer there Again, New South Wales the more story. Different fundamentals in New South Wales compared quite significantly from South Australia. New South Wales still depends upon coal fired power stations for a lot of their power. They are aging, But that about you, Graham. When things age, they all need a lot more maintenance. I certainly do. And so that's what's happening right so these guys basically said, look ahead of what normally would be peaked demand in summer, we better get these things offline, make sure they're working, pop we maintain them in a bit of spit and polish, get them back up again. Unfortunately, we saw a heat wave would normally be considered to be a summer heat way, not as you said, not the worst impossible, although some parts of Sydney a bloody hot. But we saw that happening at the same time as four of the twelve coal fired units in the New South Wales or offline. Now that was what led to a lot of the concerns. Unfortunately we'd managed to get through that, but we're running far too close to the edge and we're going to have to see some things done differently if we're going to survive this. Because we do know the old colified power stations are going to continue to be less reliable and that is a factor when you think about that new transmission line from New South Wales to South Australia. And we also know with the changing climate, we're going to see more of these weather patterns which do not reflect what happened historically.

No, there's a simple answer there Again, New South Wales the more story. Different fundamentals in New South Wales compared quite significantly from South Australia. New South Wales still depends upon coal fired power stations for a lot of their power. They are aging, But that about you, Graham. When things age, they all need a lot more maintenance. I certainly do. And so that's what's happening right so these guys basically said, look ahead of what normally would be peaked demand in summer, we better get these things offline, make sure they're working, pop we maintain them in a bit of spit and polish, get them back up again. Unfortunately, we saw a heat wave would normally be considered to be a summer heat way, not as you said, not the worst impossible, although some parts of Sydney a bloody hot. But we saw that happening at the same time as four of the twelve coal fired units in the New South Wales or offline. Now that was what led to a lot of the concerns. Unfortunately we'd managed to get through that, but we're running far too close to the edge and we're going to have to see some things done differently if we're going to survive this. Because we do know the old colified power stations are going to continue to be less reliable and that is a factor when you think about that new transmission line from New South Wales to South Australia. And we also know with the changing climate, we're going to see more of these weather patterns which do not reflect what happened historically.

When you talk about the coal fired power stations, They for generations have provided reliable, regular energy. Isn't it the reason? Isn't it the case that the only reason that they are not so reliable now is that the money isn't being poured into to maintain them.

When you talk about the coal fired power stations, They for generations have provided reliable, regular energy. Isn't it the reason? Isn't it the case that the only reason that they are not so reliable now is that the money isn't being poured into to maintain them.

Ah, partly, but it's like most things. There's a point. You know, you will keep maintaining your car for a long time, but ultimately you get to the point where the cost of maintenance far out weighs the benefit of keeping it, and you've got to get to the point do I replace it now? We've done the numbers. To replace the coal fired power stations with coal fired power stations a would cost a lot more because new ones are cheap, are more expensive than old ones, and be we've still left with the problem of climate change. And so that's why renewables but not just renewals by themselves. When people say renewables of the cheapest form of power, they mean at the point where the electricity is produced. And it's also intermittents. So we've got to have the Yes, we have to have the renewables. We also need more transmission. We also need backup storage in terms of batteries and maybe pump tired row, and we're also going to need for a while of the role against. We need all four of those if we're going to make this transition successfully.

Ah, partly, but it's like most things. There's a point. You know, you will keep maintaining your car for a long time, but ultimately you get to the point where the cost of maintenance far out weighs the benefit of keeping it, and you've got to get to the point do I replace it now? We've done the numbers. To replace the coal fired power stations with coal fired power stations a would cost a lot more because new ones are cheap, are more expensive than old ones, and be we've still left with the problem of climate change. And so that's why renewables but not just renewals by themselves. When people say renewables of the cheapest form of power, they mean at the point where the electricity is produced. And it's also intermittents. So we've got to have the Yes, we have to have the renewables. We also need more transmission. We also need backup storage in terms of batteries and maybe pump tired row, and we're also going to need for a while of the role against. We need all four of those if we're going to make this transition successfully.

We also have to factor in that renewables wear out, just like coal fired power stations do, and gas and everything else. You know, wind turbines wear out, and solar panels where so you know there is a continual upgrading and replacement needed.

We also have to factor in that renewables wear out, just like coal fired power stations do, and gas and everything else. You know, wind turbines wear out, and solar panels where so you know there is a continual upgrading and replacement needed.

Oh absolutely, And you know these the colified power stations we're talking about fifty or sixty years old. Most most expectations at the moment are that renewal energy projects have a lot short of life from that, maybe twenty or thirty years now. We don't really know yet because you don't know what you try, but we'll find out fairly soon because a lot of our solar and wind farms are now getting towards that point and they only need to be replaced. You know, when this all started, maybe fifteen years ago with solar, people are putting rooftop solar maybe one killer what Now people are putting ten or fifteen killer what's on their roof? So the whole thing is changing dramatically, and the cost of solar has come down dramatically, but the underlying issues and how we make sure we do this well are still not being addressed in the way they need to. And now you've got, you know, the federal government that said, well, look we'll pay for the renewables. You have to worry about the states how you do this. If you want gas, that's fine. If you want to much pay a bit more to keep some of those colified power stations only a bit longer, that's okay. But that will not be where we have to be in the long term, because we know that the cost of keeping those cold units open longer will go up and up and up.

Oh absolutely, And you know these the colified power stations we're talking about fifty or sixty years old. Most most expectations at the moment are that renewal energy projects have a lot short of life from that, maybe twenty or thirty years now. We don't really know yet because you don't know what you try, but we'll find out fairly soon because a lot of our solar and wind farms are now getting towards that point and they only need to be replaced. You know, when this all started, maybe fifteen years ago with solar, people are putting rooftop solar maybe one killer what Now people are putting ten or fifteen killer what's on their roof? So the whole thing is changing dramatically, and the cost of solar has come down dramatically, but the underlying issues and how we make sure we do this well are still not being addressed in the way they need to. And now you've got, you know, the federal government that said, well, look we'll pay for the renewables. You have to worry about the states how you do this. If you want gas, that's fine. If you want to much pay a bit more to keep some of those colified power stations only a bit longer, that's okay. But that will not be where we have to be in the long term, because we know that the cost of keeping those cold units open longer will go up and up and up.

We're heading closer to a federal election and there's a real point of difference. The government firmly against even looking at nuclear, where oppositionally to Peter Dutton, really wants it on the table. What do you think the outcome will be in terms of is nuclear still an option that should be considered?

We're heading closer to a federal election and there's a real point of difference. The government firmly against even looking at nuclear, where oppositionally to Peter Dutton, really wants it on the table. What do you think the outcome will be in terms of is nuclear still an option that should be considered?

Well, I think where we are at the moment, unfortunately, is not very helpful. And though although it puts as you say, puts the sharp light on the issue of nuclear, I don't see why we wouldn't have a sensible discussion about nuclear it's not an unknown technology. It's used around the world in many countries. We've never needed it in Australia because we've had all those other things we've been talking about. Maybe in the next you know, in the late twenty thirties, even early twenty forties, these things called small module in the nuclear actors could exist but don't exist commercially today. And so I think the interesting question now is it behoves the the opposition to say, well, how would we do this, because there's not much point worrying about light's going out now and cost of living now if these things, if nuclear is not going to be here and for another twenty years. So that's where I think there needs to be a plan. If there's going to be a plan, that's fine. And I don't have a problem at all about starting to think about, well, what if we don't want to have nuclear reactors, if they are by then safe and if they're all modular, and they're also I'm not prone to proliferation of nuclear waste, which is another issue.

Well, I think where we are at the moment, unfortunately, is not very helpful. And though although it puts as you say, puts the sharp light on the issue of nuclear, I don't see why we wouldn't have a sensible discussion about nuclear it's not an unknown technology. It's used around the world in many countries. We've never needed it in Australia because we've had all those other things we've been talking about. Maybe in the next you know, in the late twenty thirties, even early twenty forties, these things called small module in the nuclear actors could exist but don't exist commercially today. And so I think the interesting question now is it behoves the the opposition to say, well, how would we do this, because there's not much point worrying about light's going out now and cost of living now if these things, if nuclear is not going to be here and for another twenty years. So that's where I think there needs to be a plan. If there's going to be a plan, that's fine. And I don't have a problem at all about starting to think about, well, what if we don't want to have nuclear reactors, if they are by then safe and if they're all modular, and they're also I'm not prone to proliferation of nuclear waste, which is another issue.

They've all got that.

They've all got that.

All these technologies have got their issues. But I don't think I don't see any problem why we should not at least consider nuclear But right now our best plan is to get on with what we started to do and catch up with what we need to do so that we don't have these set of problems. We need to hope for the best. We also need to plan for the worst that we've got things ready when things as they will go wrong.

All these technologies have got their issues. But I don't think I don't see any problem why we should not at least consider nuclear But right now our best plan is to get on with what we started to do and catch up with what we need to do so that we don't have these set of problems. We need to hope for the best. We also need to plan for the worst that we've got things ready when things as they will go wrong.

Can you see a short term future where we won't have blackouts and power prices will come down?

Can you see a short term future where we won't have blackouts and power prices will come down?

Ah? But I don't do projectives of power prices. I think any politicians who promises to low power prices is kidding themselves and the consumer. I think the answer is here. Look, we've we had big power increases in all the states, including South Australia in twenty twenty two and twenty three. Well, that was driven by a whole range of issues which I won't repeat now because they were described as the great unprecedented energy crisis. But we paid for those within significant increases in July twenty twenty two, in July twenty twenty three, Now in July twenty twenty four, the benefits of getting through that and starting to see things moving down met We saw very small increases in some decreases in our consumer prices. In July twenty twenty four. Where that goes next, I think is hard to tell. Because of all the things we've been talking about. I don't think we're going to see significant increases in prices that I certainly would not be expecting that they're going to come down much from where they are now.

Ah? But I don't do projectives of power prices. I think any politicians who promises to low power prices is kidding themselves and the consumer. I think the answer is here. Look, we've we had big power increases in all the states, including South Australia in twenty twenty two and twenty three. Well, that was driven by a whole range of issues which I won't repeat now because they were described as the great unprecedented energy crisis. But we paid for those within significant increases in July twenty twenty two, in July twenty twenty three, Now in July twenty twenty four, the benefits of getting through that and starting to see things moving down met We saw very small increases in some decreases in our consumer prices. In July twenty twenty four. Where that goes next, I think is hard to tell. Because of all the things we've been talking about. I don't think we're going to see significant increases in prices that I certainly would not be expecting that they're going to come down much from where they are now.

Tony, always good to chat with your Thanks for putting it in the picture into focus. A good name.

Tony, always good to chat with your Thanks for putting it in the picture into focus. A good name.

Thanks Karen.

Thanks Karen.

That's Tony Wood, the Energy Program director for the Gratten Institute.

That's Tony Wood, the Energy Program director for the Gratten Institute.