Energy market operator grapples with record electricity demand in Queensland

A heatwave in Queensland has sent demand for electricity to record highs, and the country’s energy market operator has warned supplies are precariously placed.

The Australian Energy Market Operator has warned it has a lack of reserve electricity generation to meet record high demand in Queensland amid hot and humid weather.

The warning is the latest test of Australia’s energy grid, which has so far withstood periods of sustained high demand brought on by a hot El Nino summer.

While Australia’s traditional generators have been amply supported by renewables, AEMO said demand for electricity in Queensland hit a record high on Monday afternoon.

The market operator said it has sufficient generation commitments to meet demand but it is short of the typical reserves it keeps up its sleeve, stoking concern within the market.

Queensland Energy Minister Mick de Brenni said the state’s energy grid would be “pushed hard” but he was confident the system would avoid blackouts.

“Our message for Queenslanders is to stay cool, to stay hydrated, and to absolutely use appliances like airconditioning, however if it’s not necessary to use something, then that will help,” said Mr de Brenni.

Queensland remains on high alert as electricity demand tops more than 10,000 megawatts as much of the state swelters through hot conditions.

Queensland’s energy generators, such as the coal-powered Gladstone Power Station in Gladstone, will be under increased pressure as demand hit record highs in the state. Picture: Dan Peled

The state’s high penetration of rooftop solar will mean the grid has ample sources of electricity for much of the day, but AEMO said it was about 400MW shy of sufficient reserves during the evening peak when solar generation will rapidly subside.

AEMO said there would be heightened risk to the grid during the early evening and into late Monday.

“AEMO has issued a forecast Lack of Reserve 1 market notice for 22 January 2024 between 1830 and 1900 hrs (AEST) in Queensland, as a result of severe heatwave conditions and a record Queensland peak demand of 10,468MW forecast for 17:30 hrs,” the market operator said.

“A cool change is approaching from the south and depending on the timing of its arrival, the forecast can change. AEMO will monitor this and update its forecast accordingly.”

The energy market operator has emergency policies it could exercise if demand unexpectedly spikes or an electricity generator suffers an unexpected outage — but the shortfall of reserves leaves the state exposed, said Josh Stabler, managing director of Energy Edge,

“We have almost broken the grid demand record (10,161MW) and there are still two hours of declining rooftop solar to come. We could see new record demand close to 11,000MW,” said Mr Stabler.

Federal Energy Minister Chris Bowen said authorities were confident of avoiding blackouts, which is testament to the hard work of the system to ready for the summer.

“The Governments of Australia have been working very hard to ensure that we are as well‑prepared as we could be going into this summer, and we have been well prepared, and that is showing in the results this far,” said Mr Bowen.

Even if Queensland avoids blackouts, the spike in demand will re-evaluate wholesale electricity prices — the cost of producing electricity.

Wholesale prices do not immediately impact households, but they will flow through to customers when the Australian Energy Regulator sets the next annual market tariffs for households and businesses.

Australians pay some of the worlds’ largest electricity and gas prices and bills have increased more than 20 per cent over the last few years, stoking anger and frustration.

The Federal government is keen to avoid substantial price rises again, and recent wholesale prices had indicated more moderate increases from July 1.

Electricity price increases have been a major driver in inflation, which have forced the Reserve Bank of Australia to increase interest rates 13 times, heightening cost of living pressures.

Originally published as Energy market operator grapples with record electricity demand in Queensland