Labor’s energy spend may be the most popular thing an unpopular government has done

During last week’s campaigning for the South Australian election, Labor promised to install free solar panels and Tesla batteries in 50,000 homes, earmarked $8.7m in funding for pumped-hydro storage and announced a new solar farm and another big battery.



That renewable energy should take centre stage in the campaign should come as no surprise. The battle lines were drawn in 2016, when a statewide blackout turned South Australia’s energy policy into a crucible for the national debate.

This intense focus on South Australia’s energy network, the causes of its unprecedented blackout and its remarkable uptake of wind power, cast Australia’s fifth-largest economy into the middle of a fierce national argument.

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On one side, pundits have declared the success of the Tesla grid-scale battery as proof the state’s energy policies are working, but the Liberal opposition has cited data on powers prices to brand the state government’s approach as a “failed experiment”.

“South Australia is now so important in the national energy debate because we’ve become an example of what not to do,” Dan van Holst Pellekaan, the Liberal shadow minister for energy and mining, said.

“The state Liberals fully support renewable energy, but there must be a sensible transition to renewable sources which does not compromise the integrity of the grid and leave South Australians vulnerable to blackouts and massive prices.”

The state opposition leader, Steven Marshall, unveiled his own “Liberal Energy Solution” in October with a $100m fund for 40,000 South Australian households to add battery storage to their solar panels.

Facebook Twitter Pinterest Adelaide went dark during the power network outage in September 2016. Photograph: David Mariuz/AAP

If it sounds like the Liberal party in South Australia is placing a bet each way on renewables, it’s because Labor’s energy spending spree may be the most popular thing an unpopular government has done. The latest Newspoll shows Labor trailing behind both the Liberals and Nick Xenophon’s SA best, but Prof John Spoehr, an industry observer and director of the Australian Industrial Transformation Institute at Flinders University, says the success of the energy plan has boosted its fortunes.

“Most observers thought that Labor’s electoral prospects were pretty poor going into this election, up until the energy policy announcement. That helped to significantly improve Labor’s electoral prospects,” Prof Spoehr said.

The reason why the blackout occurred had nothing to do with renewables at all. Danny Price

That assessment is backed up by a Reachtel poll in February that found about 60% of South Australians were proud of the state’s leadership on renewable energy. Support was high even among Liberal voters with 44.7% saying Australia should switch to renewables and storage within 10 years. A majority of voters also backed Tesla’s big battery with 28.6% rating it as “very positive” and 24.6% as “positive” for South Australia.

Xenophon, who is tipped to be the kingmaker in a three-cornered contest, is yet to release his party’s energy policy but said it was being vetted by engineers. However, he told the Advertiser that investment certainty is critical for South Australia to ensure reliable power supply and blamed the federal government’s policy inertia.

“People want cheaper, more reliable power, that’s a given,” he said. “What we have been crippled with, particularly at a federal level, is a lack of a policy consensus.

“That leads to a lack of investment certainty so that people just aren’t prepared to invest in the energy market, which is an essential prerequisite to ensure that they have energy stability.”

Facebook Twitter Pinterest The South Australian premier, Jay Weatherill, attended the launch of Tesla’s 100 megawatt lithium-ion battery in December. Photograph: David Mariuz/AAP

The federal government’s own difficulties with renewables began well before the 2016 blackout. The Coalition throughout much of 2015 and 2016 was struggling to agree and articulate its own climate policy. It was evident Tony Abbott’s Direct Action policy would not deliver the cuts needed to meet targets, but any sign of a policy resembling a carbon price was antithetical to many Coalition MPs.

“It was Turnbull who signed up to the Paris agreement,” said Danny Price, managing director of Frontier Economics. “What they wanted to do was take the pressure of having a greenhouse policy off, so what they did was try to highlight the dangers of moving towards a lower-emission economy. The best way to do that was to demonise South Australia, which was further ahead.”

Trapped by the need to meet its obligations under the Paris climate agreement, South Australia’s crisis served as a convenient punching bag for the federal Coalition to distract from its internal discord.

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The prime minister and other senior members of the government went on the attack, with Malcolm Turnbull describing the blackout in the aftermath as a “horror show” and South Australia as a “socialist paradise” for its “experiment” with renewable energy.

South Australia was forced to respond and came up with its dramatic market intervention – a $550m plan for gas peaking plants and the giant Tesla battery. Weatherill said the plan was needed because it was “clear the national energy market is failing the nation”.

Price, who has advised all major political parties on energy policy, was enlisted to help draft it.



“The reason why the blackout occurred had nothing to do with renewables at all. It had a lot to do with the way the system was mismanaged in the lead up to the storm,” Price said.

South Australia has a long history with power woes going back to the 1990s when the state struggled with a local financial crisis after the collapse of the State Bank.

Facebook Twitter Pinterest Tesla’s CEO, Elon Musk, promised to deliver the battery within 100 days or it would be free. Photograph: Morgan Sette/AAP

At the 1997 election, John Olsen led the state Liberals to victory after a campaign in which he promised not to privatise the state electricity provider, ETSA. In government, Olsen quickly backtracked on that promise and pushed through the sale on the basis that it was a way to pay the state’s bills while lowering power prices in the long run.

This created a small grid, dominated by a few big combined generators and retailers, according to Giles Parkinson, the editor of RenewEconomy.

“That’s the reason it’s subject to big pricing increases at various times,” Parkinson said. “That’s been happening for years and years and that’s not happening because renewables arrived.”

While renewables have revived Labor’s electoral fortunes by providing a bold break with the past, the three-way contest expected on 17 March means there there is no way to know which way things are headed.

Whoever ends up with the balance of power will be in a position to either stall or double down on the state’s energy policy. And with South Australia setting the tone in the national energy debate, what happens here will be replayed across the country over months and years to come.