South Australia’s green energy transition proved doubters wrong

South Australia is on track to hit 100 percent renewable energy next year

• By David Fickling / Bloomberg Opinion

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Just more than 10 years ago, a wind storm sweeping through the state of South Australia appeared to deal a death blow for the energy transition.

With tornado winds gusting to nearly 300kph, damage to two transmission lines cascaded into an emergency that shut down the state’s grid for eight hours, plunging 850,000 people into darkness as night drew in. Its only coal power plant had closed just four months earlier. Wind and solar supplied 42 percent of electricity, a level only matched at the time by Denmark. As with a similar incident in Spain last year, commentators drew the obvious, false conclusion: Clean energy was to blame.

The chief executive officer of the country’s biggest steelmaker warned of an energy catastrophe. “Trying to rely on renewables is mad,” former Australian prime minister Tony Abbott said. Quoting what he said were the private comments of one of Australia’s leading power market regulators, economist Alan Moran had a grim prediction: “In the end the system must collapse.”

It is hard not to laugh at the alarmism. A decade on, there has been no repeat of the blackout, barring an incident in 2019 when the shutdown of coal generators during a heatwave in neighboring Victoria spilled over the state border. Electricity generation has increased by nearly a quarter. Renewables provide three-quarters of the total, and are on track to hit 100 percent next year.

Photovoltaic electricity is so abundant that prices in the past few months have been negative for almost a third of daylight hours. Households are entitled to sign up to tariffs giving them three hours of free electricity a day. If you are wondering what a fully decarbonized grid looks like, you do not need to speculate — it is already happening.

The most striking thing about this transition is how mundane it has been. In contrast to the forecasts of doom, South Australia’s economy has not lost out from the decline of fossil power. Indeed, on a per-capita basis the state has been among the fastest-growing in Australia over the past decade. I would like to be able to report that all that free electricity has sent power bills tumbling, but the result is reassuringly boring: With solar only holding down costs during daylight hours, wholesale electricity prices have remained stable.

Other countries should nonetheless be paying attention, because where South Australia leads, the rest of the world follows. Amid the debate in the wake of the 2016 blackout, one of the most consequential moves came from an unlikely source: Elon Musk.

On Twitter, he bet fellow tech billionaire Mike Cannon-Brookes that he could install a 100 megawatt (MW) grid battery within 100 days. It seemed a typical piece of grandiosity from Musk, who would soon switch to making wild promises and insults around the rescue of a Thai football team, but the boast turned out to be prophetic.

Not only was the Hornsdale battery installed on schedule: The technology it represented has since become fundamental to the energy transition. Worldwide, there is now more than 300 gigawatts of such battery capacity on the grid, with the equivalent of three Hornsdales added every day. The biggest holds more than 50 times as much energy. Storage of this sort is even helping to mop up all that excess solar power and send it out after sunset, helping reduce peak prices by undercutting gas. At some point in the next two years, the amount of batteries connected in South Australia alone is likely to overtake the capacity of the state’s remaining fossil-fuel plants.

Those conventional generators are rapidly dwindling in number and output. The gas turbines that remain exist almost entirely as a backup fleet, which can be switched on briefly when renewable sources dip. The sole remaining so-called baseload power station last year switched one of its two turbines so it can operate as back-up instead of always-on generation, and added a 200MW battery as well.

Not every place will find the transition as South Australia. As a relatively small corner of Australia’s main electricity grid, the state can lean on its neighbors — importing power when its own generation falls and exporting it when there is a surplus. Blessed with vast expanses of sunbaked, windswept outback, it is naturally richer in renewable resources than the likes of Bangladesh and Singapore.

Still, its success in proving the doubters wrong should be evidence that similar calls to slow down the switch to clean power should not be heeded. By the end of next year, renewables would have taken just two decades to go from 1 percent of South Australia’s generation to more than 100 percent. For all the predictions of catastrophe, the result has been so humdrum as to have almost escaped notice. Here, at least, the energy transition is over — not because it failed, but because it succeeded beyond anyone’s expectations.

David Fickling is a Bloomberg Opinion columnist covering climate change and energy. Previously, he worked for Bloomberg News, The Wall Street Journal and the Financial Times. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.