Electricity 'cancer' in WA


The West Australian Wholesale Electricity Market (WEM) is "a growing cancer" designed to drive renewable energy production to the fringes, a climate activist says.

Hills Climate Action Group researcher and former Kalamunda Greens candidate Toni Warden told Green Left Weekly that, through her work with the Stop the Eastern Terminal Substation Action Group, she has learned that "the market is essentially flawed. It is failing in its aim to reduce the overall costs of electricity and encourage renewable energy competition in the mix."

Its inherent flaw is the way electricity demand is forecast in WA, she said. This job is done by the Independent Market Operator (IMO) using "market rules". Based on the generators' capacity, Western Power then plans the development of the transmission infrastructure to get the electricity from the generators to the customers.

Having done a detailed analysis of this process, Warden believes that these forecasts are excessive, being based on what is effectively a "wish list".

The IMO asks industry to provide "expressions of interest" detailing the amount of energy that may be required for future projects, she explained. "Many of these projects will not have gone through the internal approval processes of the companies proposing them, let alone the external approval processes to comply with legislative requirements."

Warden argues that the inflated demand forecasts are used to justify the construction of unnecessary additional electricity generation capacity and transmission infrastructure, costing taxpayers millions of dollars. "The demand forecasting process suits Western Power, which makes money from the power it transmits over its infrastructure", Warden said.

Warden explained how the current set-up benefits the coal industry especially: "These forecasts give them the justification to build more coal-fired power plants. Currently, around 70% of WA's power comes from coal, with about 8% from renewables. The coal industry looks set to see four new power plants constructed in the near future. This will enable the coal industry to totally dominate WEM, with little room for the renewables sector to gain market share.

"Coal dominance will allow coal-fired generators to demand higher prices for their electricity, so people can expect big increases in their electricity bills over and above what the state government has admitted."

Given the declining oil reserves, the coal industry is looking increasingly at the lucrative business of creating oil from coal, coal gasification. This will increase competition for coal and drive its price even higher.

"If all this isn't enough", Warden added, "what makes this cancer truly malignant is the impact our coal dependence is having on our planet. West Australians are already amongst the biggest emitters of greenhouse gases on the planet, thanks to our dependence on burning coal for electricity. The increasing dominance of coal resulting from the flaws in WEM will only exacerbate our shameful record.

"The cure is simple", Warden said. "Instead of allowing market forces to shape the future of our electricity system, the state government must immediately place a moratorium on the construction of new coal-fired power stations, set aggressive targets for energy efficiency and ensure that these targets are built into the forecasting process used by the IMO.

"It needs to correct the IMO forecasting process to eliminate the bias towards overestimation of electricity demand, set strong renewable energy targets and ensure that transmission infrastructure is in place to allow the renewable electricity to get to the customer. The market rules need to be modified to give precedence to renewable generators to ensure that renewable energy targets are met."