South Australia’s energy plan gives national regulators another headache

Presumably the SA government would like this new power plant to be able to sell electricity into the NEM, but to reserve the right to commandeer its output when circumstances dictate. It is not at all clear that the NEM rules allow this.

Consider the circumstances during last month’s heatwave, when both SA and New South Wales were facing power shortages. Under SA’s proposed new rules, NSW would be on its own (unless it develops a similar policy of its own). Hardly an example of cooperation.

The same issue will apply to the battery bank. Will it only be on standby for power shortages in SA, or will it be able to discharge into the NEM to take advantages of peak pricing? Could this result in SA finding its batteries empty when the wind stops blowing?

The SA government is correct to point out the deficiencies in the NEM, and even perhaps to claim that it is failing the nation. But an interstate scheme cannot be fixed by the unilateral actions of one state government – in this case, it is likely to be worsened.

The most worrying prospect of all, as far as the NEM is concerned, is the possibility that this will increase investment uncertainty still further, making it even less likely that the interstate grid will attract the new investment it needs.

If that happens, we might well see a few more states deciding to follow SA’s lead and plan sweeping energy reforms of their own.