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Australian power crisis eases as coal-fired plants crank up

Australian power crisis eases as coal-fired plants crank up

Power lines and storm clouds can be seen above the Bayswater coal-powered thermal power station located near the central New South Wales town of Muswellbrook, Australia Mar 14, 2017. (File photo: Reuters/David Gray)

MELBOURNE: Blackout risks eased in eastern Australia on Friday (Jun 17) 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.

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

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 MW of capacity back online since Wednesday, the Australian Energy Council (AEC), which represents generators said, easing blackout risks that plagued the market this week.

EnergyAustralia, owned by CLP Holdings, said it will take a unit down for repairs on Friday at its Mount Piper coal plant in New South Wales, aiming to bring it back online early next 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.

While big manufacturers and miners typically have long term power contracts at fixed prices, some, including top building materials maker Boral, a big gas and power user, have already issued profit warnings partly due to soaring energy prices.

Smaller businesses that rely on spot gas and power markets are suffering much more.

Some smaller gas and electricity retail businesses have been forced to shut, including gas seller Weston Energy, which supplied 7 per cent of the eastern Australian market. A regulator shifted its customers to No 3 energy retailer EnergyAustralia.

"While access to firm and affordable gas from producers is problematic at this time, EnergyAustralia continues working with each of these customers to ensure they are provided the gas needed to run their business," EnergyAustralia said on Friday.

Source: Reuters/ng


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