30 June, 2017
In March 2017, the South Australian State Government (State) announced its new energy plan (Energy Plan).[1] Under the Energy Plan, the State intends to commission a new government-owned gas-fired power station and large battery array, incentivise new privately-owned generation, introduce new local powers to strengthen control over aspects of the National Electricity Market (NEM), and introduce new regulation requiring energy retailers to source a percentage of their electricity from generators located within South Australia.
The goal of the Energy Plan is clear: the State is seeking to urgently address the issues affecting the State's energy security, including systemic failures such as those which resulted in volatile prices and load shedding events during 2016 and early 2017, and the unprecedented state-wide "system black" event which occurred on 28 September 2016.
When introducing these new measures, South Australian Premier Jay Weatherill made it clear that the State considers the Energy Plan a protective measure, made necessary due to the lack of flexibility and resilience of the NEM to adequately respond to Australia's looming energy crisis.
The release of the Energy Plan has prompted a flurry of reactions; from government, industry and the public at large.
While a number of industry players and pundits have expressed support for the Energy Plan, many others, including the Federal Government and the Grattan Institute, have cautioned that the State's "go it alone" strategy could undermine the NEM, drive up prices, and further exacerbate the issues affecting the national market.
In this article, we unpack the key points of the Energy Plan, look at the steps taken by the State to implement the plan, and consider these new policies within the context of the NEM as a whole.
This article does not address the aspects of the Energy Plan concerning the State's new gas policies.
For further information, please contact:
Sean Duffy, Partner, Baker & McKenzie
sean.duffy@bakermckenzie.com
