100 Percent Renewable Goal Drives SA Energy Costs to ‘Highest in the Country’: CEO

The SA Chamber of Mines and Energy says the cost of backing up the system has also multiplied.

A single wind turbine provides electricity for 40 homes in the remote outback town of Coober Pedy, South Australia on July 5, 2005. Torsten Blackwood/AFP via Getty Images

The government’s pursuit of 100 percent renewables is pushing South Australia’s (SA) energy prices to the highest in the country, an Australian parliamentary committee has been told.

At a recent inquiry on introducing civilian nuclear power locally, Rebecca Knol, the CEO of the peak SA Chamber of Mines and Energy (SACOME), said the speedy push to adopt renewables had a marked impact on energy prices in her state.

According to a recent report (pdf) by the Australian Competition and Consumer Commission, South Australia had the highest median effective electricity prices for residential and small business customers in the National Electricity Market as of the September quarter of 2023.

Specifically, the median effective prices for households were around 39 cents a kilowatt-hour for South Australia, compared to 39 cents for New South Wales (NSW), 31 cents for South East Queensland (SEQ), and 16 cents for Victoria.

Businesses paid more with median effective prices (without rebates) at 51 cents per kilowatt-hour in South Australia, followed by NSW at 45 cents, SEQ at 38 cents, and Victoria at 35 cents.

“The AEMO [Australian Energy Market Operator] is pursuing 90-96 percent renewables,” Knol said.

“We’re at 72 percent renewables here in South Australia, and we have got the highest energy prices in the country.”

Wind turbine at Hornsdale Wind Farm in Adelaide, Australia, on Sept. 29, 2017. Mark Brake/Getty Images

Price for Backup Also Soaring

The CEO said the high prices were the result of the AEMO’s intervention in the SA electricity market in 2016 and the state’s pursuit of a 100 percent renewable target after the Northern Power Station’s closure.

“The AEMO and others have had to tinker with the system to make sure that we don’t have system black events,” she said.

“And in order to do that, frequency control ancillary services have increased 278 percent over a 10-year period.”

Frequency control ancillary services are processes used by an energy market operator to keep the frequency of a power grid within the normal operating band—if the frequency deviates, generators and other equipment may disconnect from the system, leading to blackouts.

A worker checks the fence for the compound housing the Hornsdale Power Reserve, featuring the world's largest lithium ion battery made by Tesla, during the official launch near the South Australian town of Jamestown, in Australia, Dec. 1, 2017. David Gray/Reuters

Knol also said the cost to ensure the security of the power grid during peak times—by turning gas on and off—had soared by 224 percent in the past five years.

To offset that cost, the CEO said every industrial company operating in South Australia had to pay an extra 30 percent on their electricity bills.

“So they’ve got their electricity usage, and then they have 30 percent on top of that, which is market intervention cost. It’s like a ghost of the renewable sector,” she said.

Queenslanders Beware

At the same time, Knol warned that other states might experience a similar situation to South Australia.

“What we’re seeing is the next jurisdiction that’s likely to go in the direction that we’re going is Queensland. Why?” she said.

“Because it’s like South Australia, it’s only got interconnection in one direction. New South Wales has got Victoria and Queensland to rely on. Victoria has got Tasmania and New South Wales to rely on. Queensland doesn’t.

“So these market interventions from our modeling are going to be seen in Queensland next.”

Renewables Cheapest Only in Isolation: CEO

Knol said renewables were the cheapest energy source in isolation, but it was different when the total cost of energy was considered.

She explained that there would be extra costs for building transmissions and maintaining the reliability of the power grid.

“Wind farms are effective for 40 percent of the time. Solar is effective for 30 percent of the time. Coal is effective 100 percent of the time. Nuclear, 100 percent of the time. Gas when it’s turned on, 100 percent of the time,” she said.

“We’re dealing with intermittent and base load. The conversation about nuclear is a conversation about base load.”

The inside of the Nogent Nuclear Power Plant in Nogent-sur-Seine, France, on Nov. 8, 2024 Bertrand Guay/AFP via Getty Images

Manufacturing Unlikely to Benefit from Net Zero

Knol also stated that renewables were only suitable for “mum and dad businesses” as they were unable to provide industrial heat.

“Sector that utilises industrial heat and needs huge amounts of power, and the option that we’re being essentially given is renewable power,” she said.

“Now, of course, our sector is uptaking renewable power wherever they can, but it doesn’t drive smelters. It doesn’t drive glass works. It doesn’t drive furnaces. It just can’t, and it never will.”

The CEO also raised the issue that there had been no serious conversations about renewable waste in the Australian public.

“We can have conversations about nuclear waste, but we’re not having those same honest conversations with the community about renewable waste, turbines, [and] solar panels,” she said.

“What do we do with that waste? Because we have no facility to do anything with that waste, and yet it’s all full of metals that come from our industry.”