Blackouts, sky-high power prices: What Callide generator news means

There are fears Queensland could experience more blackouts and sky-high power prices following news one of the state’s biggest power generators will remain offline far longer than expected.

Sky-high power prices are set to be pushed ever higher, while there are fears of a “heightened risk of blackouts”, with one of the state’s biggest power generators remaining offline for longer.

The Federal Government is scrambling to get more generators and storage online before the peak summer demand hits following CS Energy’s announcement on Tuesday that its Callide C4 coal-fired power generators won’t be fully operational until mid-next year.

The Australian Energy Market Operator (AEMO) is modelling what impact the delay will have on power reliability ahead of summer.

Deputy Premier Steven Miles confirmed it would put up wholesale electricity prices, which can flow on to residential customers.

Climate Change and Energy Chris Bowen. Picture: NCA NewsWire / Martin Ollman

Energy Minister Chris Bowen’s spokeswoman said the government was working with the states and AEMO to get more capacity online before summer.

But Opposition energy spokesman Ted O’Brien said Australia’s energy market was headed for a “catastrophic supply crunch” and that power shortfalls would increase the chances of price spikes and blackouts.

State and federal governments will be keen to avoid a repeat of the June 2022 energy crisis which saw record wholesale electricity prices, frequent threats of blackouts and the regulator making an unprecedented intervention in the energy market.

Callide’s C4 generator has been offline since an explosion in May 2021.

Callide Power Station Unit C4, where a 300kg chunk of shrapnel was found lodged in the roof of the Callide Power Station following the major explosion. Picture Supplied

Callide C3 was due back online from September, but is now not expected to be fully operational until February 18 next year, though will be at 50 per cent capacity from January 7.

Callide C4 was due to return to operations in stages from October 31 this year, but this is being pushed back to being at half capacity by May 19, 2024 and full-capacity by July 6.

CS Energy acting CEO Andrew Varvari the delay was due to the complexity of rebuilding the cooling towers, risks of supply chain issues and the recommissioning of the C4 generator and turbine.

Mr Miles said he was disappointed CS Energy would not get the works done on time, after the government demanded the repairs by “absolutely prioritised”.

Deputy Premier Steven Miles with Premier Annastacia Palaszczuk. Picture: Liam Kidston

“The delay will increase wholesale power prices but there is not a direct link between wholesale prices and retail prices that households will pay,” he said.

Mr Bowen’s spokeswoman said the Minister was working with his state counterparts to “ensure the lights stay on”.

“In the immediate term we are doing that by working with AEMO to accelerate connections of additional generation and storage, ahead of the 23/24 Summer,” she said.

Mr O’Brien said the energy market was “hurtling towards a catastrophic supply crunch”.

“Everyone knows that energy shortfalls are driving up prices and impacting reliability, so failure to bring these generators back online will likely spike prices further and heighten the risk of blackouts,” he said.

Last December Auditor-General Brendan Worrall detailed in his audit of the state’s energy sector the incident at Callide C had impacted energy prices.

“An incident at Callide C in May 2021 resulted in a generational unit being withdrawn from the market … This contributed to higher prices until mid-July 2021,” the report found.