Energy supply gaps forecast in Queensland and NSW amid electricity shortages during cold snap

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Eastern Australia is facing another day of power shortages, with regulators having to get generators back on the market to avoid blackouts as a long cold snap lingers.

Australia’s energy market operator (Aemo) introduced price caps of $300/MWh for the wholesale electricity market in the four mainland states in the National Electricity Market late Monday after prices breached thresholds triggering limits.

On Tuesday morning, the only state in the national market with no price cap achieved spot prices at the maximum market level of $15,100/MWh.

Aemo warned of possible supply shortfalls in Queensland around 7am and acted to ensure generation – mainly from state-owned power stations – in that state, repeating a pattern observed Monday when supply shortfalls were forecast.

In NSW, the project’s supply gaps will emerge later on Tuesday.

Matt Kean, NSW’s energy secretary and treasurer, told RN Breakfast on Tuesday he was confident the state’s electricity market would weather another cold day without consumers having to turn off their appliances to avoid blackouts.

Kean said Aemo chairman Daniel Westerman had reassured him that “enough plants are available to ensure reliability for the coming week in NSW”.

He said the introduction of price caps has prompted some growers to pull out of the market as the cap is “too low to cover their costs”.

“So that’s a market failure problem,” Kean said. “Aemo, the system operator, has the power to direct assets to inject power into the system, and that’s exactly what they’re doing right now.”

“So the system operator has that under control,” he said. “We’re keeping a close eye on it, I’m confident there will be enough plants available to ensure reliability throughout the week,” he said.

But Dylan McConnell, an energy expert at Melbourne University, said the projected deficits were artificial, caused by the sudden withdrawal of capacity from the market.

This is quite bad behavior – over 3GW of generation was withdrawn from the NSW market at one point overnight

Generators that are there but pretend they aren’t to maximize compensation by driving them. pic.twitter.com/vS25KUqrv4

— Dylan McConnell (@dylanjmcconnell) June 13, 2022

Around 2 gigawatts of generation capacity was also withdrawn overnight in Victoria. The state’s lignite-fired power plants are not tied to global markets and their fuel has not increased in line with these international price spikes.

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