New minister Josh Frydenberg backs transition to renewables, despite campaign blaming them for price spikes

Last week Australia watched as a concerted campaign waged in sections of the media went bust.



For two straight weeks a barrage of articles were published seeking to primarily blame unusually high electricity prices in South Australia on the state’s reliance on wind.

The aim and strategy of the campaign were clear: the cause of the price rises was subsidised renewable energy, and both state and federal renewable energy targets were to blame. The targets had to go.

Australia's first hybrid wind-solar farm to be built near Canberra Read more

Days before the campaign proper began, these views were being expressed by the Liberal opposition in South Australia, and reported in the Australian newspaper. South Australia, it was said, was a warning to the rest of the country about what would happen if governments invested in renewable energy: “The state’s Liberal opposition has pointed the finger at the Labor government’s ‘overzealous rush into wind power’ that it said was driving base-load electricity providers out of the market, pointing to the closure this year of the coal-fired Port Augusta power stations.”

In a policy area that has suffered years of uncertainty, it was obvious what any further tinkering with the targets would do: last time the renewable energy target was reviewed, investment in renewable energy plummeted by 70% in a year.

But it wasn’t until Malcolm Turnbull announced the makeup of his new frontbench that the campaign began in force.

The universally applauded move by the prime minister to combine the environment and energy portfolios seemed to be the spark needed to launch the anti-renewables campaign.

Placed in the hands of former resources minister Josh Frydenberg, who once argued there was a “strong moral case for coal”, the combined portfolio presented the opportunity to properly connect the inextricably linked policy areas. And the pro-fossil fuel voices were determined to make sure the transformation worked in their favour.

The next day the Australian ran two opinion pieces blaming renewable energy for the price surge, as well as a leader warning that “South Australia is the canary in the coalmine” – officially adopting the views it reported a week earlier.

Those views, of course, were also those of the coal industry. The Minerals Council of Australia said the reliance on renewables “exposed families and businesses to higher prices, supply instability and greater reliance on imported power”.

Last time the renewable energy target was reviewed, investment in renewable energy plummeted by 70% in a year.

Opinion writers agreed. It was “an act of wilful madness” for the South Australian government to let an unprofitable coal power station there close, rather than paying it to continue operating, Judith Sloan wrote in the Australian.

The Australian Financial Review reported industrial users of energy in South Australia as saying its move into renewables was “a train wreck”. And the environment editor at the Australian, Graham Lloyd, delivered a warning to the new minister. In an article reporting reasons why Frydenberg should block the approval of a windfarm in Victoria, he said Frydenberg’s task was “to avoid becoming known as the minister for sky-high electricity prices”.

The renewable energy target was repeatedly blamed, with the Minerals Council telling Frydenberg – in a press release and an opinion piece in the Australian – that he “should not mandate the composition of the energy mix.”

The gauntlet was well and truly down.

For two weeks, hundreds of column inches were devoted to the campaign.

The Australian declared – wrongly, it turned out – that windfarms in South Australia had not only caused the energy “crisis” by not producing enough electricity, but had actually consumed large amounts of electricity during the price surge. The front page “exclusive” was followed by a meek “clarification” on an inside page.

Slowly, battlelines began to be drawn as politicians took sides.

Federal Labor and Coalition leaders were difficult to draw on the matter. But South Australian senator Nick Xenophon, who has long been sceptical about wind energy, called for a national inquiry into renewable energy, saying there were “legitimate questions” about the energy mix in the state.

Similar calls were made by Northern Territory chief minister Adam Giles.

But as the debate continued, it became apparent that the voices of fossil fuel had brought knives to a gunfight. The facts were simply not on their side.



A plethora of causes to choose from

The problem with the South Australian situation was there were so many factors, everyone could use it to suit their own agenda.

Anti-wind campaigners and the fossil fuel industry blamed the reliance on wind. Clean energy advocates blamed gas. And others pointed to a trade imbalance, where South Australia could trade electricity directly only with Victoria, whereas Victoria could trade with three other states.

“There have been a lot of factors contributing, and people pick their own one,” says Hugh Saddler from infrastructure consultancy Pitt&Sherry.

As it emerged throughout the fiasco, all of these things played some role in the price surge. But not all explanations are equal.

Four visionary renewable energy projects that could pay off for Australia Read more

The immediate causes of the price spike were many and varied. South Australian energy minister Tom Koutsantonis described it as a “perfect storm”.

What made the problem possible was that the main interconnector that allows energy to be traded between South Australia and Victoria was undergoing maintanence. It was being upgraded – partly to make sure this sort of situation didn’t arise in the future – and while that was happening, it had a reduced capacity.

Then there was a surge of cold weather, causing South Australians to turn on their heaters, driving demand through the roof.



Perhaps most salient – especially in combination with the interconnector being down – gas was at record high prices due to a booming export market. And of the non-renewable electricity capacity generated inside South Australia – the available supply without the interconnector – gas is responsible for about 90%.

On top of all that, the weather was not favourable to windfarms.

And those were just the immediate causes. According to Dylan McConnell from the Melbourne Energy Institute at Melbourne University, a whole host of factors that operate at a slightly deeper level.

He says a lack of competition in the South Australian electricity market means prices are less likely to be smoothed out between competitors. So when wind generators aren’t able to suppress the wholesale market, the lack of competition in the rest of the market means prices can surge.

And while many were keen to point to wind farms as the problem, McConnell says you could equally point to the way the wholesale market prices the power – a complex issue, but one that could be tweaked.

The problem with the SA situation was there were so many factors, ​that ​everyone could use it to suit their own agenda.

Olivia Kember, head of policy at the Climate Institute, is among analysts who say the national electricity market needs reform to prevent similar situations recurring.

“It does no good to blame a single technology or a single policy for the situation we’re in. Nor is there a single solution,” Kember says.

“We need to recognise that all of the moving parts of the energy system affect each other and come up with a coherent strategy to ensure they’re all supporting the goal of secure, affordable, zero-emissions power,” she says.



The energy system is changing no matter what we do, Kember says. And currently, the transition isn’t being managed.

“A key lesson from the South Australian experience is that we need a plan for the replacement of our old, inflexible coal stations. Leaving it up to the market will lead to disruption, electricity price spikes and threats to energy security.”

She says it is not clear yet what the best solution is, but the worst thing would be to do nothing.

“The mismatch between current market settings and incoming technologies will get worse if we do nothing,” she says.

McConnell agrees with the approach to finding a solution, but is less concerned about the situation being repeated or spreading.

He says the situation was so particular to South Australia, and particular to this very moment, that it is not likely to happen again in the foreseeable future.

Wind energy in Belgium's Flanders region booms Read more

Frydenberg’s surprise response

With the fossil fuel lobby’s gauntlet down the reaction of the major parties remained elusive.

Early in the campaign, Liberal backbencher Chris Back called for a moratorium on new windfarms. But that wasn’t the first time he had made similar comments.

Then Mark Butler, Labor’s spokesman for climate change and energy, launched a counter-offensive in a speech to the Clean Energy Summit in Sydney.

“We’ve seen a really quite extraordinary exploitation of a price surge in wholesale power prices in South Australia to relaunch a campaign by some in the media, and some also unfortunately in the federal Coalition, against renewable energy,” he said.

Butler said the campaign involved “a cocktail of exaggeration, hyperbole and downright misinformation”.

“To put the blame of this situation on renewable energy is fatuous at best and downright misleading at worst.

“This is a push … by interests that have nothing more or less than an ideological bent against renewable energy. It’s a push that should not be underestimated and its a push that must be overtly challenged.”

Shortly afterwards, Frydenberg gave his first round of interviews after taking over the new portfolios. All eyes turned to see whether he would take the bait and launch a renewed attack on renewable energy.

To many people’s surprise, he stared down the two-week campaign and confirmed there would be no change to the Renewable Energy Target.

At the Clean Energy Summit, he said: “To say that [this price spike] is the fault of renewables is not an accurate assessment.” RenewEconomy reported it was received with delighted applause from the audience of clean energy advocates.

Indeed, in all of Frydenberg’s interviews, he backed the key claim of clean energy advocates and energy analysts: that the transition to renewables needed better planning.

Frydenberg said: “What I’m trying to say to people is it’s a transition and my job [is to] help ensure a stable transition to a low-emissions future.”

An urgent meeting of the Council of Australian Governments energy council was set, with reform of the national electricity market on the agenda.

The campaign succeeded in drawing the minister out, but his position was not the stance the lobby was pushing for.

Whether the campaign will continue is unclear. But since Frydenberg’s comments, the media hostile to wind has been almost completely silent on the matter.