The Australian electricity market is a complex beast. Too complex for some commentators
The Australian electricity market is a complex beast. Too complex for some commentators. Image Source: Neil Tackaberry

What is causing the ‘energy crisis’ in South Australia? What even is the ‘crisis’? When something is as ill-defined as the nebulous state of the Australian energy market, it can be almost anything you want it to be.

Potentially, the real cause of the energy crisis stems from a volume of ‘hot takes’, rushed uninformed opinions about the electricity market, that massively exceeds demand.

The National Electricity Market is a complex system. It has millions of participants, with power stations pushing out electricity, attempting to maintain the supply-demand harmony with each and every household and business across the country.

Being so complex means there are countless opportunities to push cheap opinions on what is causing an issue in the system. A little knowledge is a dangerous thing, particularly when it is combined with a desire to make an ideological point.

Turning on and off lights, air conditioners, televisions, ovens, toasters, kettles. Some households have solar panels, most still don’t. Factories starting up and shutting down equipment.

The trading of energy on the spot market is at times hugely volatile and on the surface, it can appear that the price of energy surges and falls in dramatic fashion.

Amongst all of this, it is easy to grab hold of any mishap in part in the system and attribute blame to whatever other part of it you like. Facts are up for debate.

For example, there is a clear campaign against growing the share of renewable energy in the electricity system, as they begin to push out the large incumbent players.

“Analysis” eagerly makes it into the news, churned out for the most part by political commentators turned amateur energy analysts. Often blame is attributed before the system operators, such as the Australian Energy Market Operator (AEMO), have fully worked out what has happened.

This isn’t the case of the system operators being slow in acting on major system faults, but rather those with a particular agenda seizing on an opportunity to further their arguments against embracing change from the status quo.

We would be better served if our Governments listened to AEMO, or our Chief Scientist, when they report on the state of the energy market. They should be more authoritative voices than, say, Chris Kenny or Chris Uhlmann, who offer more ideologically driven opinions.

There are certainly challenges facing the energy market. It is a system under major transition. Emerging renewable energy technologies are part of this transition, but so too are changes in the way that businesses and households want to generate and share electricity, with the lines between producers and consumers becoming blurred.

For the most part, the current electricity system was designed and built more than half a century ago. Designed on a model of centralised generation with large power stations clustered around coal mines, with a sophisticated network of poles and wires to deliver that generation to homes 

Technologies have changed. Just as the internet has fundamentally reshaped how we share information and interact with one another, so too has energy technology changed.

We can locate more and more generation capacity at the point of consumption. Solar panels on business rooftops and the potential for households to trade surplus electricity to their neighbours.

All this change is happening while we consider the environmental impacts of the system what we have spent decades building. Australia has one of the most polluting energy systems in the world and it will take significant investment to rectify that.

But are also huge vested interests with those who have already established themselves in the market. Coal fired generators and the coal mines that feed them hold by far the largest market share, and any new technology threatens that dominance.

Ultimately it must change. We will continue to experience teething problems unless policymakers embrace the new technologies entering the market. This is essential to allow system planners to prepare and adapt our energy system to incorporate technologies that will make it cheaper, cleaner and more reliable.

To do this, we must be considerate to which voices we listen and whose advice we take, when we engage in the debate about our future energy system. 

We can’t afford policy by hot take.


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