Jay Weatherill’s lesson in leadership

"The decision to transition our state to renewable energy and address the issue of climate change was made by my predecessor, Mike Rann.  What I'll take credit for is not running away when the going got tough.”

Former South Australian Premier, Jay Weatherill, gave his first public talk on clean energy since leaving office at an event jointly hosted by the Australian Wind Alliance and University of Melbourne’s Energy Transition Hub. Together with his interlocutor on the night, noted environment and clean energy journalist, Adam Morton, Mr Weatherill attracted a packed crowd of around 400 people.

Implementing forward-looking clean energy policy in the face of an onslaught of criticism that rained down on the state from the federal government was the overarching theme of the night. But as with any big decision the dangers of not doing something can be as large as the danger of doing it.

“It was an unprecedented attack by the federal government on one of its constituent elements, a state. It’s as though they were conducting themselves in relation to a belligerent foreign country,” Mr Weatherill said.

"It doesn't take courage for a government to act on climate. It takes courage not to! The political landscape is littered with their carcasses."

The video recording of the full event is here, courtesy of Australian-German Climate & Energy College, Energy Transition Hub (the sound gets better from about 6 minutes in so bear with it!)

The transcript of Mr Weatherill's speech is below.

 

Speech for Australian Wind Alliance Event – 29 October 2019

Jay Weatherill, former Premier of South Australia

On the 28th of September 2016 at 3:50pm the lights flickered in Parliament House and I didn’t think anything of it until a few minutes later a rather ashen-faced energy minister rushed into my office and said “we’re system black”… and I said “what’s system black?”. He said “well there are no lights on in South Australia”.

I secured the adjournment of the House, fortunately there was a generator in Parliament House, so we called the Cabinet together. They were all there because Parliament was sitting and we went to work. The first thing was to contact the hospitals to ensure that their back-up generators were working and with one small exception this was happening. We then turned our attention to other vulnerable people in the community and made sure that contact has been made on those people who are perhaps at home using ventilation systems. We had to be conscious of who was going to manage this emergency, we had 200,000 people in the CBD and a number of them were trapped in car parks, a number were trapped in lifts and that was obviously causing an enormous amount of anxiety.

I contacted the Prime Minister and advised him of the situation and of course our Leader of the Opposition. We put in place the emergency centre arrangements, it was on the other side of town in Police headquarters, we had to walk there in the rain because the city was gridlock and so the whole of the Cabinet traipsed across town to get to the State Emergency Centre. We heard the report from the bureau of meteorology that had arrived at that point that there had been a rare supercell cyclone which had created three tornados that had ripped out about 23 transmission lines, really the backbone of the transmission network in the mid north of South Australia. That caused a cascading series of faults which ultimately knocked out our energy system.

Within 35 minutes of the blackout, Nick Xenophon, a Senator from South Australia had found his way into an ABC studio with Chris Uhlmann, and in what was an extraordinary opening gambit, Chris Uhlmann said “40% of South Australia’s power is wind generated and that has a problem with being intermittent, and what we understand at the moment is that those turbines aren’t turning because the wind is blowing too fast”. Senator Xenophon then reported that the Royal Adelaide Hospital was blacked out. That was inaccurate, and he also warned that people would die due to a lack of oxygen because of the inability of those pieces of equipment to be powered by electricity in the hospital. I mean the first rule that we learn when we manage an emergency is to get relevant, accurate information out in a timely fashion to the community and here we had the national broadcaster and a very important leader in our community sending out those messages such as the politicisation of the national energy debate.

The next morning AEMO sent written advice to South Australian and Commonwealth governments saying that storms were the root causes of the blackout. Notwithstanding this, the Federal Coalition went into campaign mode, the following day Barnaby Joyce said on radio “wind-power wasn’t working too well last night because they had a blackout”, the Prime Minister rather than offering support (I didn’t have any communication with him during the whole of the emergency) he went on radio saying the cause of this was down to the South Australian government because of “its extremely aggressive, extremely unrealistic renewable energy targets” yet at the same time we know that what was on his desk was in fact a statement which contradicted that proposition, a statement from the Australian Energy Market Operator making it clear that the storm was the root cause of the event.

We then saw a massive storm arise on twitter basically “bring back coal to South Australia”, an amazing number of messages associated with the blackout attacking us were being pumped around the internet, we tracked one of them down to a branch of Chamber of Minerals and Energy of Western Australia and then they suddenly disappeared. The case had already been laid down for an attack on renewables which had become part of the political discourse for really over a decade. This attack was being played out in the course of what was really a state emergency but an emergency of national proportions.

Then another series of events - there was a small load shed event on the first of December which caused the transmission line from Victoria to fail, ordinarily that would be a problem because there are two circuits of them but one of them was out for maintenance, that meant that in the middle of the night there was a small amount of load shed which had an effect on BHP. That was seized upon by our political opponents to also say that this is also an issue of unreliability of renewable energy. A further widespread blackout occurred on the 27th of December 2016,  155,000 homes lost power as 350 power lines fell. It was a massive storm and it went through the Adelaide Hills, trees came down they hit power lines and that was the cause of the outage. Notwithstanding that the attacks continued to be mounted online and in the media about renewable energy and the community, all they could see was blackouts, uncertain of the cause, their respective leaders blaming renewable energy and they not having any information to throw in the balance.

So then there was a very significant event in early February 2017 in South Australia indeed across much of the nation there was a very substantial heat wave. During the course of the 8th of February our energy minister had concerns about the advice he was receiving about electricity supply. We were informally advised that Engie’s plant at pelican point which had been ready for entry into the market had not been requested by the Australian Energy Market Operator to dispatch power. Engie couldn’t understand this because they believe that South Australia was going to be short on that occasion and they needed sufficient notice to basically start up their generator. They internally sounded out AEMO about their intentions. Finally at 5:39pm when things were getting tight, AEMO called Pelican Point the Gas powered generator and asked if they could start up their unit. Engie, the owner, said they couldn’t start up immediately, they’d need 4 hours. They called back minutes later saying they could get the second unit online within an hour but by then it was too late. AEMO had requirements under the national energy law to require more reserve capacity so they sought to shed 100MW of power in the South Australian region for 27 minutes in the middle of a heat wave. Then something inexplicable happened, the privately owned distributor and network, SA Power Networks shed 300MW of Power because of a computer glitch so it said. So 90,000 homes blacked out instead or 30,000 homes blacked out.

You can imagine where South Australians were at this point, once again the political forces were gathering to strike a fatal blow to South Australia and its leadership in renewable energy and as it happened the federal parliament was sitting at this time. The Federal Government was in full attack mode on South Australia, question after question in Question Time being directed to either the Prime Minister or the Energy Minister concerning South Australia. It culminated in the then Treasurer, the current Prime Minister Scott Morrison, brandishing a lump of coal in federal parliament in question time on that day, February 9th the day after our load shedding event. It was an unprecedented attack by the Federal Government on one of its constituent elements, a state, it’s as though they were conducting themselves in relation to a belligerent foreign country. This was a constituent element of the Federation that was being attacked and its no trivial matter to have the Prime Minister of Australia suggesting that your state has such an unreliable energy supply that it can’t keep the lights on. Imagine the investment signal that sends to people that might be considering coming to invest in your state. Much of the role of a state premier especially in circumstances that we found ourselves with the closure of Holdens and a whole range of restructuring of the South Australian economy is about attracting inbound investment and here we have the Prime Minister of Australia saying that we can’t keep the lights on. So in the face of this attack we had to really ask ourselves whether we maintained our strategy in relation to the leadership in renewable energy or whether we capitulated it because this was fundamental point of inflection for us.

At that point there were also voices that were raising questions within our bureaucracy, even some of my colleagues, questioning whether this the right course given the pressure we’re under.

So I want to just pause now and talk about why we actually took that strategic decision to lead in relation to renewable energy because I think it’s worth understanding how we actually got to this point. Coming into government in 2002 we had to ask ourselves what are the strategic risks and opportunities to a place like South Australia, I mean South Australia is an unusual place in a way it’s really a slither of a population perched on the edge of a desert and climate change represents particular risks to us. This isn’t an academic exercise for us. Climate change and the way in which our climates will alter fundamentally changes the capacity for South Australia to be liveable and certainly for us to replicate the economy we once understood and had. We also took the view that this represented an opportunity because we we’re abundant in the renewable natural resources, wind, solar, and we believed that they could be harnessed to give us a competitive advantage and a way in which we could turn what has been a tradition source of disadvantage for us, the lack of being blessed with an abundant sources of fossil fuels into an advantage by pursuing a renewable energy future and we did that in a range of ways. I was planning minister at the time, the Premier asked me to put in place a permissive planning regime, we put in place the most permissive windfarm planning regime in the nation back in 2003. I also approved one of the largest windfarms in the nation to be approved up to that point, just on the edge of metropolitan area at Sellicks Hill, and that was an incredibly powerful political message, it was very controversial but it sent a very clear investment signal to that sector that if you came to South Australia you would be supported.

We also enacted the nation’s first climate change legislation, we put emissions reductions targets in that legislation and we pursued international collaborations, we became part of an international collaboration called The Climate Group, where we were one of three co-chairs of a whole range of regions and cities that came together to take action on climate change. One of the most profound things we did (because by 2006 all of the state governments were Labor we formed a thing called the Council of Federations, a group outside of code where the states and territories could meet together and by meeting together they were able to advance their own progressive causes) and one of its most decisive was to commission Professor Garnaut to undertake a thorough going review of the way in which the nation should take take action and respond to the challenges of climate change. And this was a very powerful step forward, it was the blueprint that was taken up by the Rudd government when it was elected in 2007.

We were conscious of the remarks that were made by Professor Garnaut in his seminal report which describe the challenges of climate change and the costs associated with it but also made it absolutely clear that the advantages would accrue to first movers, so those jurisdictions that would move first could gain the opportunities associated with adjusting earlier to climate change. And this for us looked like an important opportunity for South Australia given that we had so much at stake in relation to this important issue. We also understood the warning that those jurisdictions that waited for the adjustment to climate change would bear a higher cost, the burden of adjustment would be greater the longer it was left. This was a critically important proposition for us and it caused us to take that leadership role in relation to renewable energy. The scientific arithmetic of course told us that the world must move to zero net emissions for carbon dioxide and other greenhouse gasses by the second half of the century and we knew that that had critical implications for our electricity sector which is one of the dirtiest electricity sectors in the world, that needed to be a critical first mover if we were to achieve that broader objective for our economy. So that’s why we took this decision in relation to climate change and action on it. Professor Garnaut has also pointed out this was a hard message for those people who had a vested interest in the current system of energy generation, investment in existing patterns of energy generation, and there’s a massive industry, a coal industry which is wanting to continue to grow and prosper and they voice their social licence to operate.

These companies are accustomed to exercising extraordinary influence on the political process and it’s no surprise that we saw mass of misinformation and attempts to disport the political process, and this is what was cascading on top of us as we were at this critical point.

So state-wide black out, series of other blackouts, 8th of February, the straw that broke the camel’s back - another blackout. But then something happened, the conversation turned.

The public debate turned and it was fundamentally influenced by a number of factors, but the most profound was community sentiment - people believe in renewable energy. So when the Advertiser ran a poll after the state-wide blackout a few days later, hoping to do a quick knife job on me, what happened is the results came back, 73% of people blamed the storm for the state-wide blackout, 18% of people blamed renewable energy, and 16% of people said that renewables should be reduced in favour of coal and gas which raises the tantalising prospect that some people thought it was renewable energy that caused the blackout but still thought we should press ahead - so they’re really committed! So this was the first bit of sentiment that emerged, then on the 9th of December 2016 Dr Finkel presented his preliminary report to COAG, in the light of the state wide blackout. His fundamental finding was that the energy market had become unstable because of a lack of investment in new generation, and the lack of investment in new generation was caused by uncertainty, and the uncertainty was caused by the inability of the political process to effectively integrate climate policy and energy policy. Of course this debate from Professor Garnaut’s report in 2009 the climate wars had been raging all the way up to this point, what we had was a political process unable to put a price on carbon.

Now this was very powerful because it contradicted the proposition that our political opponents were putting which was that renewable energy was the problem. Ondeed Dr Finkel suggested that renewable energy was a very important part of the solution and critical to encourage it was putting a price on carbon. Another element of the debate was influenced by the final report on the state-wide blackout, and AEMO said in their final report “the most well-known characteristic of wind power, variation of output with wind strength often termed intermittency, was not a material factor in the events immediately prior to the black system”. Then they went onto look at “other potential causes for the sustained power reduction have subject to analysis by AEMO including wind turbine disconnection due to excessive wind speed, this was not a material contributor to the event”. So the criticism that underpinned the state visiting the state-wide blackout on renewable energy was completely contradicted by the final report of the system operator.

Then something which was a critical turning point. So on the 10th of February,  2 days after the heatwave that blacked out South Australia, New South Wales suffered an identical load shedding event, this time 290MW for 60 minutes, 6 times larger than the absurd amount of power directed off in South Australia, in this case 1000MW was offline at the Lidell Power Station due to issues with the boiler earlier in the week, and this is one of the challenges, all these old coal fired power stations becoming unreliable. The Colongra and Tulawarra gas powered stations also tripped up in the late afternoon and the load shedding in New South Wales was ordered after AEMO tried to actually get Bendigo and Ballarat to actually load shed and they were told to get stuffed by the Victorian Government and so they then essentially chose to tell the Tomago Aluminium Smelter to switch off and they screamed about that it didn’t affect any houses because there’s such a massive load there, they were able to get away with it. So where we got to was on the 10th of February, coal rich New South Wales was subjected to an identical load shedding event that South Australia had suffered just 2 days before.

This was fundamental shift in the nature of the debate, so what we then saw in the weeks and months following that is we also saw steep increases in prices and what transformed from a quick knife job in South Australia about renewable energy became a crisis in the national electricity market and this then became a very dangerous proposition for the federal government. The Federal Government who for base reasons sought to politicise a state emergency now being the proud owners of a broken national electricity market and this is quite a feat because constitutional responsibility for energy actually resides with the states. Malcom Turnbull walked into the most dangerous of places in Australian politics between Labor states and his right wing essentially coalition party room, and he was trapped and there unable to reach agreement and that’s the story of his demise.

 While the Federal Government was complicit we were still left with a problem. We had a national electricity market that just couldn’t deliver consistently for South Australia and we had a community fearful that companies wouldn’t invest here, they couldn’t rely on the lights being on and our energy prices are increasing – this was a critical point for us.  

Just as a bit of an aside, on the 8th of February when the blackout occurred I was organised to have an online Q&A session an hour later and I can tell you that was the most uncomfortable question and answer session I’ve ever had in my life but what it left me with the unmistakeable view that we had to act and we had act assertively.

We had to use essential this crisis as an opportunity and we did that.

The next morning I stood up and I said the national electricity market is broken and South Australia is going to take charge of our energy future. What we did over the next five weeks with that statement put out there was to invite the community, the business sector and as you’ll see the international business community to get involved in assisting us to find a solution. We had three Cabinet meetings a week for five weeks, we had experts in the Cabinet meetings assisting us to evaluate ideas and it was an iterative process as we evaluated propositions, unsolicited bids were coming into the Cabinet from a whole range of sources in the energy industry and we were evaluating them in real time and that lead to the creation of the state energy plan.

The state energy plan was a number of propositions. First we gave the energy minister the power of direction so that we don’t have to wait around for AEMO to work out whether it’s hot enough and they need to direct some power. We also ensured we had a state owned generator so that we would have backup supply so that we could respond in circumstances where there were reserve short falls. We also used the government’s electricity load to sponsor the entry into the market of a new competitor Solar Reserve, a solar thermal plant called Aurora. This was a very carefully designed proposition which was to use about 100MW of the South Australian Governments load, and then use that to leverage the building of a 150MW power plant that could be used in South Australia. We carefully designed the contract to make sure that that generator would also fit into the market at the same price they were offering the South Australian Government and because of the nature of the South Australian Governments load and the load for the rest of the state, it provided a massive benefit. Most of our load is in the middle of the day, schools and police stations and hospitals those sorts of things, the peak load for the state though is when people get home and turn their air conditioners on in the late afternoon, so that load was required to be bidded into the market in a way which would drive prices down through the introduction of new competition into our market. We also made some steps to shore up the availability of gas in circumstances where we had gas fired generators that were facing supply shortages.

So the private investment that was spawned by the state energy plan was impressive, new AGL generator at Barkers Inlet, the first to be built in South Australia for years, replacing a portion of an old inefficient and inflexible Torrens Island plant was committed too. I’ve just spoken about the $650 million solar thermal plant, and Engie that had the generator that was in mothballs at Pelican Point was brought back into service and generating power.

So as you’ve heard the strength of this plan is demonstrated by the fact that it continues to be supported by the incoming Liberal government.

During the development of the plan we were inundated with ideas about how we could solve this particular challenge and so we created a Renewable Technology Fund, $150 million to entertain these ideas. We made an early decision that a central part of the plan was going to be a big battery, a grid level battery which would provide stabilization services and also give us the capacity to meet reserve shortfalls. So a 100MW grid level battery was the first project earmarked from that fund and it’s worth pointing out that that battery was installed in time for the Summer of 2017 and performed beyond expectations. The rapid frequency response capacity of the battery left many forms of thermal generation which have typically been used to provide those frequency control ancillary services in their wake.

It’s worth reminding people of how sceptical people were about this technology.

The current Prime Minister compared Tesla’s big battery to the Big Banana the Big Pineapple, Matt Canavan the Resources Minister likened it to Kim Kardashian of the energy market, “famous for being famous”. We also received advice from the Australian Energy Market Operator, who in the same month as we announced the plan, published a report suggesting the maximum size of the utility scale lithium-ion battery would be 1MW. AEMO also said just months earlier that utility-scale batteries were about 10 to 20 years away from providing meaningful contributions to the grid. These are the expert operators of our national grid. The Minerals Council of Australia, the primary coal lobby in the country, were quoted suggesting that they couldn’t imagine a grid level battery beyond 20MW and it would take one year to design and two years to build. So what in fact happened is that the South Australian Government for about 4.6 million dollars per annum over 10 years achieved a very substantial benefit for the South Australian grid. It was called into action by AEMO even before the official launch, injecting 70MW of stored wind energy into the market on November the 30th as prices soared amid low wind generation and a missing coal unit at Loy Yang A.

Once it was officially opened two weeks later it stepped in when Loy Yang coal generator in Victoria suddenly tripped to illustrate how quickly it could respond in milliseconds rather than the minutes that would otherwise be required. And this was critical because responding in minutes is the difference between the Australian Energy Market Operator being required to load shed so it’s the difference between the lights staying on and there being blackouts. We also know that it played an important role just recently when two lines connecting Queensland and New South Wales tripped simultaneously after twin lighting strikes causing widespread outages in three states and the grids in Queensland and South Australia. South Australia, AEMO acknowledged, was the only state to emerge from this emergency event unscathed. So the Tesla big battery provides these frequency control services but there’s an important financial benefit as well, not only does it provide these services more effectively and more efficiently, it also introduces competition into a market that was dominated by just a few players and so it’s estimated in the first quarter of this year the cost of FCAS, Frequency Control Ancillary Services, followed by nearly $33 million or 57 percent according to AEMO in large part because the introduction of the Tesla big battery.

So this has made a very substantial contribution to the South Australian region of the grid indeed the whole grid but at this time I think it’s probably worth an anecdote, one thing that happened in the lead-up to the establishment of the plan was the contemplation of a big battery and I must acknowledge Zen Energy, a South Australian company that actually first put the grid level battery on our radar in fact they encouraged us to look at one in the United States and so the proposition of a grid level battery was already on our radar and indeed I think Zen Energy have now been taken over by Mr Gupta (he liked the company so much he bought it) decided that they could have gone ahead with that battery themselves if the rules of the national electricity market permitted pricing intervals of 5 minutes so it’s one of the examples of how regulation not catching up with current technologies. But in any event it was already going to be a part of our plan but I was horrified to see Elon Musk tweet on the 10th of March, I think it was three days before we were about to launch our plan, that he would build one of these batteries for 100MW and if it wasn’t delivered in a hundred days it would be free. Problem is that everybody in Australia that was interested in this basically got on to me and said to me “accept this deal, it’s the deal of the century” and I couldn’t say that this is a centrepiece of our plan and I, there was a small problem with probity in doing so, so I did the next best thing. I got on the phone to him and said look would you mind not tweeting anymore because its driving me crazy. So he put out another tweet saying he had a good discussion with me and that got people off my back but ultimately Tesla did win the tender and then Elon Musk came to South Australia to announce it.

I don’t think there’s been a point in the history of the state, at least certainly in recent memory, that the state has received so much positive international coverage. In fact New York Times, 20 million followers, describing it as the first great engineering feat of the 21st century, extraordinarily powerful set of images and it helped to some degree to turn around the reputational damage that was done to South Australia by our federal colleagues so we were very grateful for that.

So the Renewable Technology Fund that not only provided for the big battery it also did a number of other exciting things as well. It funded a virtual power station, so 50,000 rooftops with solar and batteries in our social housing estate to be linked up by technology in a way that will provide a 250MW virtual power station, another exciting project, and a range of other storage technologies in the form of liquid hydrogen.

So this threat, this challenge to South Australia which led to the creation of the plan and then a technology fund which essentially was driving innovations and new investment in renewable energy and storage technology had these other incredibly important economic benefits for South Australia. We saw Sonnen, a German battery manufacturer decide to set up an operation in South Australia to actually make batteries in our state and excitingly for the people of the northern suburbs that were grappling with the closure of Holden in the former Holden plant, the very plant that was making cars now manufacturing batteries. This is an incredibly powerful story of transition and we’re also seeing other exciting examples of transitioning, in Port Augusta you’ve heard, is an incredible image of a coal-fired power station being decommissioned and in the foreground a desalination greenhouse, Sun Drop farms both in the same landscape. Jobs of the future, the jobs of the past so this was a very powerful story for our state.

I suppose that’s where I wanted to really bring this together, when we really started, in 2002, as a state was to consider our natural advantages, we knew that we were facing a very significant set of challenges with the closure of our car industries, we also knew that climate change represented an existential risk to our state. And so we didn’t want to be paralysed by these challenges, we wanted to turn them into opportunities and that’s why we approached the matter in this way, we saw it as an opportunity to project an image of us around the world which reflected our values so what we are saying to the world that this is a place that values action on climate change, come and be a part of this story, join this state that has not only the intellectual capital but the moral capital to take on one of the great challenges of our generation. That’s why we participated in the international forums, that’s why we went to the 21st conference of parties in December 2015.

The overwhelming message out of that Paris climate change conference was not pessimism about the nature and scale of the challenge, that was realistic and acknowledged, but it was the consensus that emerged between the nations of the world and indeed the business of the world about the imperatives of climate change and the opportunities that were presented to us and those opportunities are extraordinary. We can become a nation of innovative, clean tech companies, we can use our abundant natural resources to create a competitive energy price and attract energy intensive industries, there’s no reason why we can’t continue to make things with the competitive advantage from renewable energy. The old fossil fuel industries will no longer provide us with the income growth they once provided. Fossil fuels have been important to the lifestyle that we’ve all enjoyed but they by definition are coming to an end because of the rate of depletion of those resources and now because of the imperatives of climate change. So what we need to do is to look to those industries that can take advantage of a carbon-constrained future, things like hydrogen for the reduction of iron ore or the production of nitrogen fertilisers or of course liquid fuels that are associated with hydrogen, essentially transportable renewable energy. So our capacity to take on the challenges and turn them into opportunities has been at the forefront of our thinking, I believe that the South Australian energy future is bright, we’ve taken a leadership role, we’ve starred down our opponents and we’re very confident this represents the future for our state, our nation and indeed the world.

Thank you

 


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