SA energy price rose sharply moment Port Augusta power station shut down
CLOSURE of the Port Augusta power station resulted in immediate price surges of almost 75 per cent – and has largely set the scene for South Australia’s current power crisis, a leading industry group says.
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CLOSURE of the Port Augusta power station resulted in immediate price surges of almost 75 per cent – and has largely set the scene for South Australia’s current power crisis, a leading industry group says.
The average daily spot price in May, according to the Australian Energy Market Operator, was $46.82 MWh up until Alinta’s 544MW Northern station was turned off, before jumping to $80.47 MWh for the remainder of the month.
Since then, things have only become worse with the June average of $123.10 MWh more than double what it was a year prior. The July average, as of Tuesday, was $320.79 MWh.
Australian Industry Group chief executive Innes Willox said SA’s energy crisis could not be attributed to the Port Augusta closure alone but it “helped set the scene”.
“The loss of that generation capacity raises the likelihood that shortfalls in the interconnector or renewable generation send prices soaring,” he said. “But most of all, the closure happened so fast that the market had little time to prepare or adjust — it’s a clear marker of the danger of disorderly transitions.” Alinta — which has declined to comment on recent price volatility — pointed to falling demand and government policy targeted towards renewables as key factors for its decision.
“Throughout the four and a half years that we have been running the business, we have investigated all possibilities to find a viable economic solution for its continued operation,” chief executive Jeff Dimery said at the time.
Clean Energy Council network specialist Tom Butler said the power station’s closure came about because the associated Leigh Creek coal mine had run out of “economic” coal. He added: “But it meant that the state used more gas-fired power, which pushed power prices up — as it did last week when the price of gas spiked to four times its usual level at times.”
Energy Minister Tom Koutsantonis said of most concern was that national energy market infrastructure hadn’t kept pace with changing methods of generation.
“Coal is old technology that is on the way out and what we saw in SA, we will start to see in other states, so it is important we reform the market now,” he said.
Meanwhile, The Australia Institute’s Matt Grudnoff said SA’s “obscene price spikes” — most evident last week when the spot price hit $14,000MWh — had been caused by market manipulation by gas companies along with an upgrade to the interconnector.
“What’s happening in SA shows that (the gas industry) is prepared to exploit the current national electricity market regime rather than perform that role,” he said. “Gas generators are able to rapidly fire up additional output in the event of reduced renewable generation . . . but due to export contracts, they’re picking overseas over local production.”