Power shock: SA holds firm after unprecedented market intervention

South Australia avoided major power outages overnight but the Australian Energy Market Operator – which yesterday took the unprecedented step of suspending the electricity market to guard against catastrophic power failures – is still warning of a lack of reserve over the coming days.

As Premier Peter Malinauskas warned the country is witnessing “market failure on a grand scale”, AEMO yesterday indefinitely suspended the electricity spot market in South Australia, NSW, Queensland, Victoria and Tasmania.

Power prices are not expected to rise and the lights will stay on as a result of an unprecedented step to suspend the electricity market, AEMO CEO Daniel Westerman said in a late afternoon media conference in Adelaide after the operator made the first-of-its-kind move – which has previously only been done on an individual state level.

AEMO’s updates forecast a rolling shortage of reserve capacity potentially affecting parts of SA, including throughout this morning and tomorrow.

But Westerman’s primary warning was for customers in New South Wales, who were urged to conserve energy if possible to do so safely.

“By suspending the market we’ve created a single process whereby AEMO has true visibility of which generators are available, and when, in advance – rather than relying on last-minute interventions,” he told reporters yesterday.

“That visibility will help us to manage the system in real time and well as understand the balance of supply and demand in the periods ahead.”

Westerman said the drastic intervention was a “temporary measure” which would be “reviewed daily”, saying the operator would “return the market to its normal state once AEMO is confident” it could operate properly.

He said AEMO had issued directions for around 5000MW of power – roughly 20 per cent of demand – in the past day, arguing “it’s simply not possible to continue to operate the market in this way”.

“We’ll reinstate the market once we’re confident we’re able to operate it,” Westerman said.

“It’s a confluence of factors at the moment… what we’re seeing is a very challenging time [and] it would seem the market is not able to deal with all the factors thrown at it.”

He said the “fact is many of our coal-fired generators are getting towards the end of their life… and reliability is slowly declining”.

A range of factors – described by Energy Minister Chris Bowen as a “perfect storm” – include a cold snap, a large number of power plants being out of action for planned maintenance, planned transmission outages, and periods of low wind and solar output.

EnergyAustralia said the Yallourn coal-fired power plant in Victoria had two generating units online: “We aim to have all four units operational very soon. Our maintenance teams are working hard to get all units back online, and we thank them for their hard work.”

Energy Minister Chris Bowen said he was pleased significant load-shedding events and blackouts had been avoided so far.

“I’ve made clear to AEMO that the government supports any action they choose to take to effectively manage the situation in the best interests of Australian consumers, whether they be big industrial consumers or residential consumers,” Bowen said.

Prime Minister Anthony Albanese urged energy companies to meet their responsibilities to customers, while Opposition Leader Peter Dutton argued there had been energy security under the previous Coalition government.

“This is on Labor’s watch. I’m very worried for families and businesses across the country,” he said.

The issue is set to be firmly on the agenda when state Premiers arrive in Canberra today ahead of a national cabinet meeting on Friday.

-with AAP

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