While politically popular, renewable energy is inherently intermittent. That has boosted SA's vulnerability to supply disruption, especially given the closure of much of the baseload capacity.

"It is the cutting edge of the world," Warren says of developments in SA. "A large grid, large renewables with no hydro, so it is non-dispatchable renewables. It is an experiment, a function of solar feed-in tariffs, the RET [renewable energy target], local planning laws, renewable energy sources – and it is occurring now."

The rising level of risk has been reflected in the futures market, with the price for baseload electricity supplies in SA surging to more than $75 a unit in some quarters of 2016, topping $80 in 2018 – well above $35 to $40 in Victoria and NSW over the same period.

"It is not the market that has caused this problem but the incentivisation of renewables power," says David Headberry, public officer of the Major Energy Users Group. "If anything goes wrong, it will go wrong in South Australia. The interconnector capacity with Victoria should increase."

Justifying risk

After bring mooted in 2009, it has taken years for interconnector capacity between SA and Victoria to rise, partly because of the difficulty of signalling the economic merits of an upgrade.

Headberry says one view is that the price differential between the regions should trigger an upgrade, while the opposing view is that a market benefit can't be clarified when the benefit is just being transferred from one part of the national electricity market to another.

"Demonstrating the economic case is hard," director of the energy program at Grattan Institute, Tony Wood, says. "Who's going to take the economic risk if you get a return for only a few hours a day?"


All the more so, given the limited volatility of wholesale prices.

"I don't see any evidence this has seriously been thought about," Wood says of the concerns of a crunch in SA.

The Australian Energy Markets Operator has warned SA faces possible shortages at a time when solar electricity alone is forecast to be able to supply 100 per cent of its electricity needs for some periods.

"At the operating level, there are doubts whether solar photovoltaics add costs or benefits to the network," says Grattan's Woods. "Mostly, solar PV adds complexity and cost – but it is manageable.

"No one is too sure how it will work. Some say this is a train wreck that is about to happen."

A failure with the interconnector would result in the loss of emergency supplies from other states flowing into SA, significantly elevating the risk of disruptions.

"It is better to have the discussion now, rather than after the event," ESAA's Warren says "This is an observable risk – a slow-moving event."