Coal fail on hot, windless day sends power price shock through SA and Victoria
Back in January, wholesale power prices jumped more than ten times their average level. Now, an official report has found out why – a failure of coal and too little wind.
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Electricity prices spiked more than tenfold above the average wholesale price in South Australia when a coal-fired power station in Victoria broke down on a windless day in the January heatwave, an investigation has found.
The next day, storms in Victoria knocked over transmission pylons in Victoria sending prices spiking again despite SA having excess cheap wind power, the Australian Energy Regulator found.
In official reports published over the weekend about events on January 30 and January 31 this year, the operator found multiple factors were involved.
On January 30, the temperature hit 43 degrees in Adelaide and 39 in Melbourne, sending electricity demand higher than forecast.
However, throughout the day prices were lower than expected until about 6:30pm when a unit at the Loy Yang A coal-fired power station tripped, taking 560MW generation out of the supply side then running at about 12,000MW.
Simultaneously, wind power was 122MW less than expected and only about a tenth of installed capacity.
The sudden gap had to be filled with high-priced generation, sending prices in SA and Victoria to about $12,000MW/h for a short period.
So far this year, the average price in SA is about $70MW/h.
Despite the loss of the generator, no shortfall was declared and there was no load shedding.
On January 31, when six high voltage transmission towers between Lismore and Moorabool in Victoria were blown over, SA was islanded from the rest of the National Electricity Market.
SA had excess wind and solar power but the market operator was forced to restrict cheap output from these sources and enlist more expensive gas-fired power to ensure stability.
Prices in SA spiked to $9832/MWh.
The loss of SA exporting energy to Victoria was combined with technical problems at several NSW generators, including Snowy Hydro, Liddell and Bayswater.
Prices in Victoria and NSW went above $5000/MWh several times and the Australian Energy Market Operator had to call on Reliability and Emergency Reserve Trader generation to ensure sufficient supply in those states.
Spikes in wholesale prices are not immediately felt by households because retailers use financial derivatives as shock absorbers to cushion the blow.
However, the cost of the derivatives are built into longer term pricing, which does affect ordinary consumers.
The AER reports came as the Australian Energy Market Commission published reports recommending a streamlined decision process for major transmission projects such as interconnectors between states.
The AER on Friday also warned retailers of their social responsibility during the coronavirus crisis.
“When people have lost their jobs or business through no fault of their own, it is only fair to expect that they be given any and all help possible, and that includes from their energy providers,” AER chair Clare Savage said.