The stink of rotting barramundi in the Hazelwood cooling ponds will be an apt metaphor for Australia's rancid energy planning, after the generator's last unit shuts the day after April Fool's Day.

Despite the long-anticipated closure of the plant, the Victorian Government introduced the tropical fish into the balmy waters of the Hazelwood pondage in April 2016.

The aim was to attract tourist anglers and there has been keen interest, even the odd poacher.

People trying to catch prized barramundi on the Hazelwood pondage at the opening of the season in December. ( ABC News: Nicole Asher )

But when the plant's boilers are switched off the pond waters will go cold — when temperatures in the La Trobe Valley plummet to single digits in winter.

The optimum temperature for barramundi to thrive is 28 degrees Celsius — so the fish will die and the stench will be an eloquent testament to Australia's policy-induced energy crisis.

The Australian Energy Market Operator is forecasting shortfalls in energy that could see major blackouts in Victoria and South Australia from December. How did it get to this?

The beginning of the end

Australian politics broke on December 1, 2009.

On that day then-opposition leader Malcolm Turnbull lost the Liberal leadership to Tony Abbott by a single vote. He had battled for months, and failed, to get the coalition to sign on to Labor's Carbon Pollution Reduction Scheme.

The Greens also opposed Labor's plan, arguing it would "lock in failure".

So began the carbon wars that rage to this day. The upshot for the energy sector has been an investment strike on building new gas-fired baseload power.

In comes the Renewable Energy Target…

In the absence of a carbon price the Renewable Energy Target has been driving investment and helping Australia hit its carbon reduction targets.

Much of that investment has been in wind and most flowed into South Australia, because of its abundant resources and receptive state government. Rooftop solar has also more than doubled there since 2012.

Now, with 43 per cent of its generation sourced from renewables, that state has a higher penetration of wind and solar power than almost any other jurisdiction on Earth.

This has been an unexpected, and instructive, experiment.

And then the market broke

Subsidised wind farms bid on the National Electricity Market against other forms of power.

The market works on a merit order, where low-cost generation is dispatched first.

When the wind is blowing a generator's marginal cost of producing electricity is next to nothing, so it underbids coal and gas.

And there's another problem for thermal generators.

The rapid rise of solar panels on suburban homes means that electricity demand is supressed in the middle of the day, which also cuts into their margins.

So the drop-off in demand coupled with a subsidised, underbidding competitor, drove coal-fired power stations out of business in South Australia and saw high-price gas plants mothballed.

Capacity constraints

The end of fossil fuel generation in South Australia would be a cause for celebration if wind and solar could be relied on to deliver power all the time, but they can't.

Research by the Australian Energy Market Operator shows that wind farms deliver their advertised capacity for about 35 per cent of the year.

Financial year Annual South Australian wind generation (GWh) Annual change in wind generation Annual capacity factor 2011-12 3,563 34pc 2012-13 3,475 -2pc 33pc 2013-14 4,088 18pc 32pc 2014-15 4,223 3pc 33pc 2015-16 4,322 2pc 33pc

So, when South Australia hits the calm-dark of a hot summer evening, demand surges back on to the grid and thermal power has to "ramp up" to meet demand.

The perverse effect of all this is that wholesale electricity prices are rising sharply across the national electricity market as coal exits and high-priced gas steps in to fill the void.

Frequency control

There is another, more complex, problem…

Coal-fired generators, hydro and gas have a large spinning mass of turbines embedded in them.

Put out the fire or remove the water and the inertia in the turbine will keep it spinning until it is stopped by friction. The stability and reliability of the entire electricity system depends on inertia.

Even when wind and solar are providing the bulk of the power in South Australia, they are doing little to keep its frequency stable.

This is another service that is often imported from Victoria.

What's the fix?

So, as South Australia has discovered, putting large amounts of 21st-century renewable energy on a 20th-century grid throws up some big challenges.

With other states setting high renewable targets, and without a clear direction on a carbon price from the Federal Government, is it any wonder that no-one wants to invest in baseload power?

The foundation stone for securing the power system has to be a cross-party commitment to a carbon price and a national energy plan signed off by the Commonwealth and the states.

History shows this will be a very hard fight and the man who has to lead it is the one who was so badly battered in the very first round.

There is an equally difficult battle on the left, where few will admit the current technical limitations of renewables demand that gas generation has to fill the void left by coal.

Even if that was all sorted, getting that gas at a reasonable price will be another test as Australia's political class has also managed to lead the nation to a domestic gas shortage, with the big gas companies chasing the highest bidders in the global market place.

So, whatever shape the future takes, only one thing is certain: electricity prices will rise.

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