Target for energy security requires retailers to source 36% local power from 2020

An Energy Security Target, a plank of the state government’s $550 million energy plan, will not come into effect until 2020. 
Instead of giving incentives to new renewable projects, the target will require retailers to source 36% of the state’s electricity needs from local gas generators and other synchronous power sources.

The government hoped that commissioning new generation projects in South Australia through the target would boost energy security by stabilising the grid. It was also intended to provide more competition among power providers and bring lower power prices for consumers.

But the energy security target was delayed until 2018, and then 2020, after power users and energy companies — including battery giant Tesla — criticised the government’s proposal. Renewable energy companies were concerned that the target would create an effective cap on renewable energy within the state and lock out renewable generators.

The revised date for the target also responded to recent changes in the energy market. These include the Australian Energy Market Operator (AEMO) requiring at least three synchronous generators operating in South Australia at all times, and announcements by private generators that will bolster synchronous generation capacity in the state.

Also, 49 of the 50 recommendations of the federal government’s Finkel review into the energy system are being put in place, many relating to system security. South Australia has joined with other states in asking the Australian Energy Market Commission to work with AEMO to immediately develop and design the options for a Clean Energy Target, after the federal government failed to endorse that Finkel recommendation.

Modelling from Frontier Economics also indicates that, for the energy security target to lower power prices, it needs to be operating a more competitive energy market that would be in place by 2020.