Energy operator expected to seal long-term reserves in bid to prevent more blackout warnings

Long-term capacity contracts will help the Australian Energy Market Operator prevent fresh blackout warnings ahead of a critical summer period.

The Australian Energy Market Operator is expected to imminently agree to new reserve contracts that once agreed will allow the agency extra capacity ahead of a critical summer period.

The contracts, which could be signed within days, come as authorities brace for a summer when demand for electricity will spike, and the industry remains anxious after a precarious day in NSW on Wednesday when the grid struggled to meet demand.

The crisis has triggered fierce debate about who bears responsibility for NSW’s near-blackout, stoked when hotter than normal weather coincided with a spate of coal power outages.

Some 31 per cent of the state’s coal power capacity was offline on Wednesday. This would typically power the state when solar generation begins to ebb, but a spate of planned and unplanned outages limited the capacity of the grid to respond to increased demand for cooling as temperatures across the state jumped well above normal.

NSW’s largest coal power station, Origin Energy’s Earing, is expected back online on Friday, while repairs to one of the four units at AGL Energy’s Bayswater coal power station are on course to be finished on Saturday.

The scheduled maintenance of a second Bayswater unit and Delta Electricity’s Vale Point coal power station is scheduled to be finished next week.

The return of the capacity will be a relief to authorities but will do little to quell citizen anger at the near-miss.

Angus Aitken, top left, has blasted Chris Bowen's renewables strategy as energy prices soar.

Stockbroker Angus Aitken has lashed out at federal Energy Minister Chris Bowen, saying he should be held responsible for high energy prices amid fresh threats to Australia’s power grid.

Labor insists the responsibility lies with coal, highlighting planned and unplanned outages as the catalyst for actions that saw the country’s energy market operator mobilise emergency measures and the state Labor government urge households to minimise usage.

Mr Aitken said the market pricing illustrated how Mr Bowen was wrong. “Look at the power prices in NSW yesterday … in the late afternoon, when power demand starts picking up as people get home from school and work is when renewables production ­tapers off. So even if you doubled renewables without enormous batteries and gas peakers, you have no ability to supply reliable base load power from renewables 24-7,” he said in a note to clients.

Aussies at Bondi Beach as the mercury soars in Sydney. Picture: Sam Ruttyn

The government insists its plan to have renewables provide 82 per cent of national electricity will adequately provide sufficient power, and has said taxpayers will underwrite some 32GW of new capacity by 2030. Alternative renewable energy generation to solar such as wind power could plug the gap when the sun begins to set, but industry figures insist Australia must urgently get on with developing new sources of gas.

So-called gas peakers could be turned on and off quickly in response to inadequate supplies, but the country’s east coast is rapidly running low on gas.

Even if new sources can be unlocked, the industry insists market signals are insufficient to spur ­millions of dollars in capital ­expenditure.

The industry has pleaded for a capacity scheme, which would pay gas peakers to be ready to dispatch when needed – allowing them greater clarity on the potential returns of an asset that may sit idle for days.

The Coalition has proposed including gas in a capacity scheme, but it has been rejected by Labor.

Previous efforts to establish a capacity scheme were vetoed by the Victorian Labor government.

Originally published as Energy operator expected to seal long-term reserves in bid to prevent more blackout warnings