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An electricity price surge driven by a South Australian power shortage has triggered an expert warning of catastrophic national grid failure during a multi-city heatwave.

Frontier Economics chief Danny Price, a key architect of energy policy for state and federal governments, warns renewables cannot meet high electricity demand and predicts significant outages and high prices.

Wholesale electricity spot prices spiked in SA to near the $20,000 per megawatt hour limit on a still Monday night, when household batteries drained and wind generation dipped, prompting the Australian Energy Market Operator to issue a low-reserve warning at 8.42pm.

Gas and coal-fired generators filled the supply gap and capitalised on the higher market prices, which ultimately contribute to household and business bills.

Mr Price, who played a key role in costings for the federal Coalition’s 2025 election nuclear policy, state Labor’s shelved $593m hydrogen power plant and the “big battery” delivered by Elon Musk, warned electricity supply issues were intensifying.

“This is what there’s going to be more and more of and it becomes more acute the more Victoria basically winds out its coal generation,” he said.

“Coal generation was basically holding up the entire eastern seaboard yesterday (Monday) and probably today (Tuesday) as well. In fact at the moment (1.30pm Tuesday) Victoria is about 65 per cent coal right now. Solar is obviously high, because it’s a cloudless day. But wind is actually pretty low.”

Mr Price said “we’ve been very, very lucky” that simultaneous heatwaves across multiple capital cities had happened in recent years only on weekends or public holidays.

“When the system is experiencing a high demand in three states – New South Wales, Victoria, South Australia – and that happens over a couple of days, then the system really is under strain,” he said.

“If that happens, then I’m pretty confident there’ll be some significant outages and high prices.

“It is only a matter of time. It will happen. There’s no doubt that it will happen. Year by year the system becomes more fragile and that’s because people are spending less on coal.”

Grattan Institute energy senior fellow Tony Wood agreed with Mr Price that SA had not been on the brink of load shedding, or controlled blackouts, saying gas-fired generation had underpinned the grid.

“Right now, gas is the best form of backup to our current system, and it’s likely to be that way for a while. We may stop using gas in our homes, we may stop using gas to make pizzas or whatever, but we may have a long time where we’ll still use gas as the backup in the power system.

“I don’t see that as a bad thing, by the way, because I think what happens is that gas, even though if it ran for five per cent of the year, which is what AEMO is currently predicting, the emissions would be tiny across the entire year.”