28 September 2016 was a significant date in Australia’s energy system. 

That Wednesday, around 850,000 South Australian electricity customers lost power in one of the most significant ‘system black’ events in Australian history.¹ A powerful storm damaged three major transmission lines and destroyed more than 20 transmission towers.² The resulting voltage disturbances caused several wind farms to disconnect and the electricity system to collapse.³

The outage was estimated to have cost $367 million.⁴

A transition that still needs a safety net

South Australia has since become a world leader in renewable energy. Renewables supplied almost 80 per cent of the state’s electricity in 2025.⁵ At times, solar, wind and batteries produce more electricity than the state consumes.

However, considering renewable generation in isolation does not paint a complete picture.

Batteries have a critical role in integrating renewables, responding rapidly and reducing the risk of load shedding. The Tesla big battery, brought online in December 2017, was an important addition. Yet, while batteries are excellent at managing short-term interruptions in our energy system and providing short-term storage solutions, they can’t deliver the long duration energy storage required when the sun doesn’t shine and the wind doesn’t blow for extended periods.

The need for a safety net beyond batteries was demonstrated again during a multi-day wind drought, or ‘dunkelflaute’, in South Australia in June this year. 

As captured in the chart below, as renewables fell away, the state’s grid-scale batteries stepped up, but were discharged within hours and had nothing left to give. It was gas-powered generation that stepped in, complemented with solar when available, for the following four days, doing the heavy lifting to fill the gap and keep the lights on.

The system needs more than energy 

In addition to providing this much needed energy, gas-powered generation is also an important source of system security. Synchronous rotating generation provides essential electrical services including inertia, voltage support, system strength and fault current. These services are not easily replaced by batteries or inverter-based technologies.

Voltage issues were a feature of the April 2025 ‘system black’ across Spain and Portugal, the most severe European blackout in more than 20 years.⁶ The circumstances were different, but the reminder was the same: system security cannot be taken for granted.

South Australia is building a safety net

Ten years after the blackout, South Australia is putting the final touches on the policy designed to deliver secure long-duration, dispatchable electricity capacity - the Firm Energy Reliability Mechanism, or FERM.

The FERM is intended to ensure South Australia has long-duration capacity available to run for days or weeks during extended periods of low wind and solar generation, the safety net South Australia needs as it transitions toward its goal of 100% renewable energy. 

In practice, much of that insurance is likely to be provided by gas-powered generation.

That is the purpose of a reliability mechanism: not to run firming generation all the time, but to make sure it is there when the system needs it most.

Delivering a safety net across the National Electricity Market

The rest of the National Electricity Market (NEM) is now moving in the same direction. 

The proposed Electricity Services Entry Mechanism, or ESEM, should help bring forward the firming capacity the NEM will need. But important design details are still being finalised, and delay carries a cost and risk.

Transmission and renewable generation projects are already taking longer to build. If replacement generation and firming capacity does not arrive in time, state governments will face growing pressure to further extend the lives of ageing coal-fired power stations.

That would increase the risk of missing Australia’s emissions-reduction targets. It would also leave the system more exposed to unexpected generation and transmission outages.

The lesson from 28 September 2016 is clear: ambition must be matched by pragmatism and planning. Industry is ready to invest in the safety net needed to provide resilience, so long as the right policy settings are in place.

¹  AEMC Issues and Approach Paper, Review of the System Black Event in South Australia, 2019, page 1. 
²  ABC, SA's statewide blackout was five years ago — here's how energy supply has evolved since then, 2021
³  AER, The Black System Event Compliance Report, 2018, page 13.
⁴  AEMC Issues and Approach Paper, Review of the System Black Event in South Australia, 2019, page 1.
⁵  Energy.gov.au, Australian electricity generation - fuel mix calendar year 2025, Australian electricity generation - fuel mix calendar year 2025 | energy.gov.au
⁶  ICS Investigation Expert Panel Final Report: Grid Incident in Spain and Portugal on 28 April 2025, 2026, page 1.