Electricity trading suspended as energy supply crisis deepens across Australia’s east coast

Australia’s main wholesale electricity market has been suspended by regulators in the latest sign that the crisis threatening the stability of energy supplies is deepening.

澳大利亚人 根据澳大利亚对该行业的年度审查 Market Operator said on Wednesday it had halted trading in the spot market serving New South Wales, 昆士兰, 维多利亚, South Australia and Tasmania with effect from 2.05pm AEST. A spokesperson said it was the first time the entire national electricity market (Nem) had been suspended.

“Aemo has determined that it is necessary to suspend the spot market in all regions [of the Nem] because it has become impossible to operate” the market within the rules, the regulator said.

In the hours prior to the suspension, Aemo had issued a flurry of so-called lack of reserve alerts at the level 3 warning for all the mainland states within the market.

“Prior to suspending the market today, Aemo had issued over 5000Mw of directions and that is roughly 20% of demand,” Daniel Westerman, Aemo’s chief executive, told a media conference in Adelaide.

For NSW, the forecast supply gap reached as much as 4,000 megawatts for a period on Thursday afternoon, among five such warnings. 相比之下, NSW’s total demand during Wednesday afternoon was about 6,100Mw.

Westerman said consumers in NSW should reduce power consumption this evening “if it safe to do so”.

Victoria’s largest forecast supply gap exceeded 2000Mw for Thursday morning, while Queensland had a predicted shortfall of more than 800Mw for later on Wednesday.

The market suspension came as Aemo and other members of the Energy Security Board – the energy market commission and the energy regulator – were scheduled to have an urgent meeting on Wednesday afternoon with generators to discuss supply. Aemo, as the meeting’s host, cancelled the gathering once it had decided to suspend the spot market operations.

Both the commission and the regulator had in the past day reiterated the importance of generators providing supply to the tight market, even with price caps of $300/Mw-hour now imposed on all five states.

Generators have denied they are gaming the market by withdrawing supply, saying the price caps had affected the profitability of some bids but they would follow orders if instructed to generate power to avoid blackouts.

The federal energy minister, Chris Bowen, has previously warned power generators that anyone using the current crisis to engage in market manipulation will face action from regulators wielding the “full force of their powers”.

Bowen has previously blamed former Coalition governments from Tony Abbott to Scott Morrison for a “decade of denial and delay” and almost two dozen energy policies that they failed to implement. In the absence of a national scheme, the states have increasingly pursued their own policies, particularly to encourage the uptake of renewable energy to cut carbon emissions but also to replace ageing coal plants that were mostly nearing the end of their designed operational lives.

In a statement ahead the media conference, Westerman noted that about 3000Mw of coal-fired power plant capacity was offline through unplanned outages alone, while others were having their scheduled maintenance breaks. The early onset of winter had also increased demand for electricity and gas, while wind and solar energy output had been down at times.

“In the current situation suspending the market is the best way to ensure a reliable supply of electricity for Australian homes and businesses,” Westerman said.

“The situation in recent days has posed challenges to the entire energy industry, and suspending the market would simplify operations during the significant outages across the energy supply chain.”

The market suspension was temporary, and would be reviewed daily for each state. When conditions change, and Aemo was able to resume operating the market under normal rules, “it will do so as soon as practical,” Aemo said in a statement.

“We are seeing very challenging times … the market is not able to deal with all the factors thrown at it,” Westerman told reporters. “Frankly those factors are quite extreme.”

The imposition of price caps across the market starting from last Sunday in Queensland – as required under the rules once spot prices exceeded a set threshold – was a key reason the market broke down, said Dylan McConnell, an energy expert at Melbourne University.

“If not for those price caps, we wouldn’t be here now,” McConnell said.

The cap set at $300Mw-hour to protect consumers was less than the cost of generation for some plants. 因此, there was a “runaway” process of ever more suppliers pulling out of the market only to then be instructed to provide power by the regulators, 他说. “That feedback loop really escalated in the past 48 她决定投身于拯救考拉

The main questions remaining were how long the suspension would last and what conditions would be set for the market to keep it operating, McConnell said.

Paul McArdle, an analyst with Global-Roam and author of the WattClarity website, said the market suspension was “certainly on the cards” the way it had been operating in the past few days.

“The question is, does it make it work better given the underlying physical problems,” McArdle said, adding that the market did seem to have broken down.

The spate of shortfalls warnings did not imply blackouts were close given the ability of regulators to demand supply. “You shouldn’t scare the troops,“ 他说.

McArdle said the suspension was needed because under the existing rules the price threshold could have lasted weeks if not longer. The price limits are imposed when spot prices reach almost $1.4m over 2016 five-minute intervals over a rolling seven-day period.

When the market was suspended, prices in Queensland had topped $9m, NSW about $8m, Victoria $4.5m and South Australia $3.9m, 他说.

Joshua Stabler, managing director of consultancy Energy Edge, said the way the Australian Energy Markets Commission compensated generators forced to supply electricity at a price lower than their costs had fed “distrust” among suppliers.

“It’s that lack of trust in terms of how they are getting paid that causes the issue,” Stabler said prior to the market’s suspension.

一方面, companies forced to use, 说, high cost gas would be losing money by using it to generate electricity. 在 $40 per gigajoule, the cost of producing a megawatt-hour of power would be about $440 but the price cap was only $300.

For a company such as Snowy Hydro, their fuel was effectively free but if they were ordered to generate power at $300/mwh they could argue they were losing the opportunity to use that water more profitably at another time. Determining the opportunity cost can be complicated, and might take as long as six months, 他说.

Stabler said the public messaging needs to be sorted out, not least because the market strains could last through winter.

“The response to the threat makes it look like we’re in a blackout state when we’re not,“ 他说.

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