The idea that renewable energy has made power supply less reliable “is wrong and dangerous”, argues the Grattan Institute.
“It’s wrong because almost all outages are caused by problems in transporting electricity, and have nothing to do with whether the power was generated from new renewables or old coal or some other technology,” argue Tony Wood, Guy Dundas and Lucy Percival in a new report.
And it’s not just about setting the record straight — they’re worried that “if politicians over-react to public concern and rush to intervene in the market, electricity bills could rise even higher.”
A lack of generation capacity on hot days caused only 0.1% of outages over the past decade, while more than 97% of outages were due to problems with the local poles and wires that transport power to homes and businesses, the report argues.
“If we respond to misperceptions, we are likely to add to the cost of electricity while doing little to improve reliability.”
‘Expensive to prevent all outages’
It is not reasonable to aim for 100% reliability anyway, says Grattan.
“Equipment failures, falling trees, inquisitive animals and crashing cars can all cause the power to go out in the local distribution network. It would be prohibitively expensive to prevent all these outages,” they believe.
Ultimately, consumers must pay for such ‘gold plating’ — expensive works that only lead to marginal improvement — and they are in some states already.
Increasing renewable generation does create challenges for managing the power system, Grattan concedes, though energy market authorities are already taking significant steps to rejig the grid to deal with increased solar and wind generation.
The report explores further reforms to continue improvements to the energy system. A stable policy framework is needed to reduce emissions and encourage investment in new supply so that such outages remain rare, says Grattan, but other ideas, such as a centralised capacity market or direct government intervention to support investment, are not required.
“If we keep calm and carry on, these challenges can be met without more big price increases for households and businesses.”