Any way the wind blows: Power generation in South Australia

by Rod Campbell and Matt Grudnoff

South Australia leads the country in several aspects of renewable energy development. The state has the highest installed capacity of wind generation – more than 1,200 megawatts. In 2013-14, 37 per cent of electricity generated in the state came from wind and rooftop solar, more than any other state in the country.

South Australia’s wind generation has a direct influence on wholesale electricity prices in the state. When wind generation is high, wind can satisfy the entire demand of the state and export a surplus to Victoria. Unfortunately, wholesale price savings are rarely passed on to retail consumers – retail prices in Adelaide have followed Australia-wide trends over the last ten years.

Relatively high retail electricity costs have contributed to South Australia having the highest rate of rooftop solar adoption in the country. More than 20 per cent of South Australian households now have installed solar systems.

A large expansion in wind generation is planned for South Australia – more than 3,000 megawatts are currently proposed, almost three times current capacity. This expansion is being placed in doubt by uncertainty relating to the federal government’s Renewable Energy Target (RET).

The RET brings considerable economic benefit to South Australia. The state is the largest producer of the scheme’s Renewable Energy Certificates (RECs), generating $136 million worth of the certificates in 2013. This benefit to the state’s economy is also placed at risk by uncertainty over the future of the RET.

The large increases in renewable energy generation in South Australia have resulted in decreased generation from coal and gas-fired generators. This shows that large increases in wind generation do not require increases in fossil fuel capacity as a ‘back up’ for when the wind does not blow, as is sometimes suggested by critics of renewable energy.

Full report