Power prices fall as SA embraces natural gas

November 10th, 2017

Wholesale electricity prices have been falling in South Australia – a state previously burdened with the highest prices in the world. 

The reason? A switch to gas-fired electricity.

After the state-wide blackout last year, and a number of subsequent electricity outages, the Government turned to a dormant gas-fired generator for relief.

The results of this action alone have been both clear and welcomed by industry, small business and consumers: electricity supply has been stabilised and price has been reduced.

It is why the SA Government’s long-term solution for SA’s power problems includes a new gas-fired electricity generator to be built – as well as the world’s biggest battery.

SA is in the position of paying an undisclosed sum for Elon Musk’s Tesla to build the big battery because storage is needed to help provide back up to the State’s big, but intermittent, wind and solar energy generation capacity.

However, the huge battery will be able to provide only 3-4 hours back-up for about 30,000 homes. This cold comfort for some residents is of no use to SA’s small business and industrial users of electricity.

For them, supply certainty is essential – and that is where the gas-fired generator comes in. For about $400-500 million, it will provide the supply certainty which has been absent in SA since the activist-celebrated closure of the State’s two coal-fired power stations.

Anti-gas protesters have tried to claim that fossil fuels are to blame for high electricity prices in SA. Even they have had to acknowledge the actual truth now – that gas is the most effective solution and that it can help get power prices down.

This was the headline in The Guardian this week: ‘South Australia experiences dramatic fall in energy costs after gas deal’

The ‘deal’ referenced was a commercial arrangement to supply gas to the previously mothballed gas-fired generator at Pelican Point, north of Adelaide.

It was the Pelican Point facility which came to the rescue after the state-wide blackout, as we have reported previously.

For SA business continuity and residential comfort this summer, when the heat comes and the air conditioners are switched on, a reliable source of electricity is needed. Right now that is Pelican Point and the high-voltage interconnector between SA and Victoria.

For the longer term, SA needs the planned new gas-fired generator (Pelican point is ageing) to complement the state’s substantial, but intermittent, renewable energy plant. Otherwise thousands of businesses will suffer – and so will tens of thousands of families, including the elderly, who are at risk in stifling heat.

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