Unprecedented intervention in the Australian East Coast energy market will be phased out the next day, with authorities increasingly relying on wholesale electricity supply.
Key points:
- AEMO suspended the wholesale electricity market last week
- The staggered resumption will cause the market to set prices again from tomorrow
- AEMO expects to be completely out of the market on Friday morning if supply is guaranteed
The Australian energy market operator (AEMO) last week took control of the East Coast energy market for the first time in its history after days of volatility putting several states at risk of blackouts.
The federal government backed the intervention, acknowledging that the energy market had effectively failed and credited the AEMO with having managed to avoid both blackouts and load declines as temperatures on the east coast plummeted.
AEMO said yesterday that there was enough supply to pass on Wednesday, but confirmed that it was still running the generators to pump energy into the grid.
AEMO CEO Daniel Westerman said the market will start setting the price from 4am on Thursday, with the market fully restored 24 hours later, as long as supply is guaranteed.
“We’re doing a series of operational measures and working very closely with generators to make sure that dysfunctional behavior doesn’t happen again,” he said.
With the electricity sector last week facing rising costs, AEMO initially imposed a price cap and forced generators to offer its services.
But then AEMO suspended the spot market completely in the domestic electricity market, which includes Queensland, Victoria, South Australia, NSW and ACT, saying it was impossible to guarantee a reliable electricity supply in the current circumstances.
“We put network security and keep the lights on above everything else,” Waterman said.
The crisis has been caused in part by rising global coal and gas prices and an aging fleet of coal-fired power plants in Australia that are operating below capacity.
Even after AEMO left the market, it warned that the east coast could face challenges in maintaining supply and demand.
Energy Minister Chris Bowen called AEMO’s action “prudent” and endorsed the step-by-step approach to re-imposing normal market conditions.
“The risks remain in the system and I know that AEMO continues to monitor what needs to be taken care of in the coming days,” he said.
Posted 7 hours 7 hours agoDmec. June 22, 2022 at 12:20 PM, updated 6 hours ago Wednesday, June 22, 2022 at 1:33 AM