Australia’s energy crisis eases as coal-fired power plants start up

  • Sufficient power supply to meet weekend demand
  • 1,900 MW of coal-fired power plants have restarted since Wednesday
  • “Challenges remain,” says market operator

MELBOURNE, June 17 (Reuters) – Power outage risks eased across eastern Australia on Friday as around a third of coal-fired generation that had been taken out of service returned to service in recent weeks, but the market operator said the electricity crisis was not over.

“The Australian Energy Market Operator (AEMO) can confirm that sufficient electricity supply can be made available to meet forecast demand over the weekend in all parts of the national Australian market. electricity,” the operator said in a statement.

Australia’s densely populated east has faced a power shortage since mid-May as around 25% of the market’s 23,000MW of coal-fired capacity has been taken out of service for maintenance or unplanned outages, exacerbated by coal supply disruptions and soaring world coal and gas prices. Read more

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To stem the crisis, the market operator took the unprecedented decision on Wednesday to regain control of the supply and pricing of electricity by suspending the national electricity market.

“Challenges remain in the energy sector and AEMO will continue to monitor supply levels and risks in all regions,” he said.

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

EnergyAustralia, owned by CLP Holdings (0002.HK), said it would dismantle a unit for repair on Friday at its Mount Piper coal-fired power station in New South Wales, with the aim of bringing it back online at the start of the next week.

Prime Minister Anthony Albanese backed the market operator’s intervention in the market, telling the Australian Broadcasting Corp on Friday that it had been necessary because there had been “a bit of play in the system”.

Some observers have suggested that generators deliberately withhold power, in order to benefit from market rules under which they can be compensated for any generation sold below operating costs if the operator subsequently asks them to supply electricity.

“There is a widely held view that this removal is related to producers taking advantage of the various forms of compensation available. The AEC rejects this view,” AEC chief executive Sarah McNamara said in a statement. .

She said generators with limited supplies of fuel or water and large-scale batteries with limited energy reserves were shipped in such a way that their energy reserves would quickly run out and threaten bigger ones. problems on the way.

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

While large manufacturers and miners typically have long-term, fixed-price electricity contracts, some, including major building materials maker Boral Ltd (BLD.AX), a heavy consumer of gas and electricity, have already issued profit warnings in part due to soaring energy prices.

Small businesses that rely on spot gas and electricity markets suffer much more. Some smaller retail gas and power companies have been forced to close, including gas seller Weston Energy, which supplied 7% of the eastern Australian market. A regulator has moved customers to third-party energy retailer EnergyAustralia. Read more

“Although access to firm and affordable gas from producers is currently problematic, EnergyAustralia continues to work with each of these customers to ensure they receive the gas they need to run their businesses,” EnergyAustralia said on Friday. .

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Reporting by Sonali Paul; Editing by Muralikumar Anantharaman and Lincoln Feast.

Our standards: The Thomson Reuters Trust Principles.

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