Warnings of blackouts on Australia’s east coast are not as disastrous as they seem, an expert said.
The Australian Energy Market Operator (AEMO) has issued automatically generated warnings in recent days informing consumers of market-related shortcomings that could lead to power outages in several states.
NSW, Victoria and South Australia exceeded the energy price limit and entered an “administrative price situation” yesterday, while Queensland did the day before.
Blackouts in the eastern states of Australia are unlikely, an expert said. (Luis Enrique Ascui / The Age)
Energy Minister Chris Bowen has downplayed the risk of blackouts as a result of energy shortages, although he has warned it could be a “bad” winter.
Dr Dylan McConnell of Climate and Energy College at the University of Melbourne told nine.com.au that the current situation was “a bit artificial”.
Essentially, power generators are withdrawing energy capacity from the market due to a maximum price of $ 300 per megawatt-hour (MWH).
The price cap means that generators would put the supply on the grid at a loss.
Power generators are meeting a price cap. (60 minutes)
But McConnell said that for more than 10 years there was a safety mechanism that allowed generators to recoup their costs in this situation.
So why hasn’t it been like that now?
“What’s really going on is that they’ve chosen a different path,” McConnell said.
Instead of the traditional route, McConnell said, it seemed that the generators were choosing to withdraw the supply from the market to provoke an AEMO order to release it, for which they would also be paid.
“No one knows why they chose this path,” McConnell said, noting that the compensation in this case would probably be less than that offered by the traditional route.
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Although McConnell said the energy market was “tight” and there was always the possibility of a blackout, it was unlikely and the appearance of “shortage” was a bit misleading.
But he warned that Australians should get used to it, as in the absence of a “dramatic intervention” there was little reason to believe the current cycle would be over.
High coal and gas prices contribute in part to the problem, as they increase the cost of energy production.
But the ongoing debate over coal-fired power plants or the development of renewable energy, while an important part of the context, was essentially peripheral to the circumstances that led to shutdown warnings.
“More capacity might make it less likely, but it’s not entirely relevant,” McConnell said.