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Australian power crisis eases as coal-fired plants crank up

17 Jun 2022


MELBOURNE, June 17 (Reuters) - Blackout risks eased in eastern Australia on Friday as about a third of the coal-fired generation that had been offline in recent weeks returned to service, but the market operator said the power crisis was not over.

"The Australian Energy Market Operator (AEMO) can confirm sufficient electricity supply can be made available to meet forecast demand over the weekend across all regions in the National Electricity Market," the operator said in a statement.

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Australia's heavily populated east has faced a power crunch since mid-May as around 25% of the market's 23,000 MW of coal-fired capacity has been off line for maintenance or unplanned outages, exacerbated by coal supply disruptions and soaring global coal and gas prices. read more

To staunch the crisis, the market operator on Wednesday took the unprecedented step of taking control over power supply and pricing by suspending the national electricity market.

"Challenges remain in the energy sector and AEMO will continue to monitor supply levels and risks across all regions," it said.

Coal-fired generators have brought 1,900 megawatts (MW) of capacity back on line since Wednesday, the Australian Energy Council (AEC), which represents generators said, easing blackout risks that plagued the market this week.

Prime Minister Anthony Albanese backed the market operator's intervention in the market, telling the Australian Broadcasting Corp on Friday it had been necessary because there had been "a bit of gaming going on in the system".

Some observers suggested generators had deliberately withheld power, aiming to benefit from market rules that they can be compensated for any output sold below operating costs if later directed by the operator to supply power.

"There is a widespread view that this withdrawal is related to generator profiteering around different forms of available compensation. The AEC rejects that view," AEC Chief Executive Sarah McNamara said in a statement.

She said generators with limited fuel or water stocks and large-scale batteries with limited energy reserves were being dispatched in ways that meant their energy reserves would rapidly run out and threaten bigger problems down the track.

To prevent that happening, generators and large-scale batteries had to be removed from the normal dispatch process, she said.

Big manufacturers and miners so far have not been hurt by the soaring power and gas prices, as they have long term contracts at fixed prices. However, smaller businesses that buy their power and gas on the spot market have been hammered.

Some smaller gas and electricity retail businesses that bought their supply on the spot market have been forced to shut, including one gas seller that supplied 7% of the eastern Australian market. read more