Hi all.
The issue seems to be related to rising prices and the 'Generators' not being able to cover running costs.
This local news article sheds some light. (unintended pun).
https://www.abc.net.au/news/2022-06-15/qld-avoid-blackouts-aemo-energy-security/101151282
jtg
An energy economist is calling for an independent
inquiry into Queensland's energy production following millions of
households being told to conserve power for a second consecutive night
due to generators reducing their output in response to a cap on prices.
Key points:
- Power generators were ordered to cover projected electricity supply shortfalls again last night
- Blackouts were avoided with AEMO stating "there was sufficient electricity supplied to meet consumer demand"
- Energy experts have called for urgent government action to avoid ongoing issues
The
Australian Energy Market Operator (AEMO) ordered power generators to
cover projected electricity supply shortfalls again last night, after a
perfect storm of energy chaos in Queensland and New South Wales,
including cold weather, offline generators and soaring power prices.
This morning AEMO said despite forecast supply shortfalls, "there was sufficient electricity supplied to meet consumer demand".
"AEMO
continues to encourage generators … in Queensland, New South Wales,
Victoria and South Australia to bid their availability into the market,
rather than being directed to do so," it said.
Meanwhile, Victoria Energy Policy Centre director Bruce Mountain said Australia was in an "absolute market crisis".
Professor
Mountain said generators are largely shielded from volatile spot prices
(the market value for energy) and effectively holding production to
drive up prices.
"Nothing like this has been experienced in Australia," Professor Mountain said.
"What's really going on, I suspect, is bullying by the coal and gas producers – they're pointing to the spot prices."
Bruce Mountain thinks there should be an inquiry into current energy shortages.(ABC News)
He said most generators secure their fuel through contracts with the price locked in months in advance.
"I suspect this is quite possibly a very serious case of market cornering," Professor Mountain said.
"We need an independent inquiry into the extent to which their production is affected by spot prices.
"I don't think we can accept at face value the idea that the generators are blameless.
"Serious government action is needed now."
Why are some generators turned off?
Because
the AEMO has set a fixed price cap for consumers at $300 a megawatt
hour, some generators have withdrawn supply from the market.
What is load shedding?
In the electricity industry, no two words instil a greater sense of fear or failure as load shedding. Here's why.
Read moreGreen
Energy Markets director of analysis, Tristan Edis, said the $300 a
megawatt hour figure is below the cost of fuel for many gas power
plants.
"They've said they don't want to supply
electricity because this price is not enough to cover our costs and so
they've withdrawn their supply," Mr Edis said.
"They're effectively switching off … or saying: 'I'm not available to generate'.
"It's
like someone saying – I want to give you a job but I want you to go
2,000 kilometres away and I want you to drive or fly at your own expense
and I'm not going to compensate you for the cost of all this travel.
"It is possible for AEMO to force them online but then they have to compensate them to recover their real costs," he said.
Five of Queensland's power plants are currently out of action. (PublicDomainPictures: Pixabay)
Gas prices also remain capped at $40 a gigajoule, so effectively, it is too expensive for some generators to come online.
Energy market analyst David Leitch said it takes around 10GJs of gas to produce 1MWh of electricity.
That meant it would cost gas generators $400 to produce 1MWh of electricity, plus running expenses.
"Your basic cost before you've even made a dollar is around $450," Mr Leitch said.
Mr Leitch said they waited for the market operator to direct them to generate at a loss, entitling them to compensation.
"They covered their costs and made a reasonable profit," Mr Leitch said.
Who will pick up the bill?
The short answer is: the consumer, eventually.
Professor
Mountain said generators ordered to come online would make an
application to the Australian Energy Market Commission to claw back
their costs.
"It is essentially a compensation for the production costs plus a margin," Professor Mountain said.
"It's then up to those market participants to provide evidence they buy on the spot prices."
The cost of intervention will end up on Queenslanders' energy bills down the track.
"It's paid by all consumers, much as they would pay if there was a price set by the market," he said.
Which power generators are offline?
Five government-owned Queensland power generators offline for maintenance.
Queensland Energy Minister Mick de Brenni said that included one gas, one hydro and three coal-powered plants.
"They
are going to start coming back on as early as Thursday … [others] will
come back on sequentially until April next year," he said.
What the price cap means for your energy bills
Here
is what we know about the price cap, the strain on the energy grid and
how you can keep your bill and energy consumption as low as possible.
Read moreThe
Callide C4 coal-fired generator near Biloela has been offline since an
explosion in May last year and the Swanbank E gas generator in Ipswich
is also out.
Mr de Brenni said publicly owned
generators, Stanwell, CS Energy and Clean Co have been "providing all
the supply that they possibly can."
Mr Leitch said recent flooding has also affected coal generation in Queensland and New South Wales.
"[Rain] flooded all the open pit coal mines and restricted supply," he said.
How long will this continue?
An AEMO spokesperson could not provide a time frame on how long tight supply will last.
Spring could bring some relief, with less heating required and more solar generation.
Want more local news?
We offer tailored front pages for local audiences in each state and territory. Find out how to opt in for more Queensland news.
Read moreMr Edis said the risk factors could stay for years, with high gas and coal prices sticking around.
"I
suppose the expectation would be that a number of coal generators will
come back online and then that will to a large degree alleviate the risk
of shortages," he said.
"Unfortunately, it's not going to alleviate the high prices we're seeing at the moment.
"They're
going to be here for quite some time because unfortunately the invasion
of Ukraine has led to elevated prices for gas which will be maintained
for … at least a year to two years and probably the same for the
international price of coal.
"That will flow through to electricity prices."
What can be done long term?
Mr Leitch said Queensland has not built enough wind and solar, as coal-fired stations age.
"This has been coming for a decade — Queensland has been the state that's been the slowest about it," he said.
"Queensland should be doing two or three times as much wind or solar that it's doing every year for the next decade."
Associate
professor of energy economics at the University of Adelaide Liam Wagner
said "a broad range of technologies" must be implemented onto the
national market.
"Wind and solar … and hydrogen and
pumped hydro to be able to get ourselves away from coal and relying on
these very old coal-fired generators which need lots and lots of
maintenance and they break down all the time," he said.
Posted 2h ago2 hours ago, updated 11m ago.
jtg