Australia

Australia’s national electricity market has been suspended for the first time. How did it come to this?

For the first time ever, Australia’s national electricity market has stopped, and the market operator says so .
The Australian Energy Market Operator (AEMO) said in a note released on Wednesday it had suspended electricity spot markets in NSW, Queensland, South Australia, Tasmania, and Victoria, until further notice.
It came after the eastern states were .
“The situation in recent days has posed challenges for the entire energy industry, and the suspension of the market would simplify operations during major outages across the energy supply chain,” AEMO chief executive Daniel Westerman said.
It is the first complete suspension in the history of the national energy market, which began in 1998, and means the operator will take control of directing supplies from energy generators to the East Coast’s electric grid.

The operator will also set energy prices for each market jurisdiction.

Among the main causes of the crisis included due to a cold snap in New South Wales and Victoria.
Another factor is energy generators – which usually provide spare parts when production capacity is low – pulling out of the market after AEMO imposed a $ 300 / megawatt-hour cap on market prices.
“This is the fault of the government, on both sides, for refusing to implement a domestic reservation policy,” Dantin University energy law professor Samantha Hepburn told SBS News.

“It is totally ridiculous that we do not have a protection mechanism for the domestic market that reserves a certain portion so that we do not have to buy it back at 80 times the price and so that retailers can realistically buy and make a profit from the business they run. “

What is causing the crisis?

Associate Professor of Economics at Monash University, Guillaume Roger, said the crisis was not due to a lack of supply but a deficit in the ability to generate enough energy to feed demand.
“Right now, we are in the midst of a crisis where the market is essentially collapsing,” he told SBS News.
“There is no shortage of supplies, it is just that we lack about two or three gigawatts of coal capacity, which is normally available to us.
“The estimate is about 20 to 25 percent of the coal fleet is currently not working.”

When there is an equipment problem like this, the market relies on generators to put energy back into the market to meet demand.

On Monday, AEMO imposed a $ 300 / megawatt-hour cap on the wholesale energy market for Queensland, South Australia, Victoria and New South Wales.
“We don’t see $ 300 per megawatt very often, the average price is about $ 70, and the price limit in the market is $ 15,000,” Associate Professor Roger said.
“But we have generators that produce at $ 400, so they need to pay $ 400 for the product. If you give them $ 300, they prefer not to.”

If the generator refuses to be purchased, AEMO may order that the energy be returned to the mechanism. They can then seek compensation for the additional cost.

What does a freeze walk do?

Professor Hepburn said the market freeze means AEMO is trying to determine if it continues to impose price limits.
“The purpose of the freeze is to try and work on how to implement the National Electricity Rules in a way that will make sense,” he said.

“There is also, in my opinion, strong enforcement of emergency regulations regarding reservations and reservations.”

THE MOST

Mr Westerman said AEMO’s suspension from the market is temporary and will be reviewed daily.

He said it will rise when AEMO is confident the market will function properly.

Should you be concerned?

Associate Professor Roger said because most Australians have energy deals and a fixed tariff, the impact will be minimal for most consumers.
“They’ll barely notice, you know, unless we see a blackout, of course. If you see a blackout it’s a disaster for anyone affected,” he said.
Professor of economics at the University of Melbourne, David Byrne, said that while the rise in wholesale electricity prices will not affect consumers in the short term, they will notice a difference over time.
“Anything you buy involves manufacturing and production, everything that takes electricity to produce and we never really think about it,” he says.
“It’s just sitting in the background, and we don’t think of this as something that affects us in terms of keeping our lights on or in terms of the costs of everything we buy and consume. But you’ll see that happens to consumers over time. “

– With AAP.

Australia’s national electricity market has been suspended for the first time. How did it come to this? Source link Australia’s national electricity market has been suspended for the first time. How did it come to this?

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