Power supplies slashed as heatwave strikes
A fall in generation from two coal-fired plants has crimped supplies to the nation’s electricity grid amid a searing heatwave.
An ill-timed fall in generation from two of Australia’s largest coal-fired plants has crimped supplies to the nation’s electricity grid amid a searing heatwave which could see power cuts hit Victoria and South Australia. The power system operator yesterday warned of potential “load shedding” in the two states if it can’t find sufficient demand response or additional generation to fill a supply gap.
Outages and planned maintenance have shaved more than 1000 megawatts of potential output from the country’s national electricity system amid a move by the market operator to boost shortages of reserve capacity available in Victoria.
MORE: Blackout risk in southern states
Temperatures of 46 degrees are expected in Adelaide today while Victoria’s Latrobe Valley may reach 45 degrees tomorrow, the Australian Energy Market Operator said yesterday, as part of a warning of extreme heat in the two states this week.
Power prices in Victoria are scheduled to hit the maximum of $14500 a megawatt hour (MWh) for up to four hours this afternoon, with a similar peak price likely to hit South Australia. The spot electricity price in Victoria rose to $184 a megawatt hour late on Wednesday afternoon with South Australia topping $205 a megawatt hour, AEMO data shows.
A tight reserve margin raised speculation AEMO may need to intervene and use reserve contracts to maintain stability.
However, a gap between reserve capacity and the minimum required narrowed yesterday after the operator sought an official market response.
The lost output from two ageing coal plants and a major gas generator during one of the tightest supply-demand periods of the summer underlines the fragility of the grid despite vast volumes of renewables boosting output over the past few years.
A 560 megawatt unit from AGL Energy’s Loy Yang A coal station in the Latrobe Valley was knocked out of action yesterday due to a tube leak, with repairs likely to take about three days.
The other three units comprising 1650 megawatts are running at full capacity and AGL said the coal plant remained among the most reliable plants in the power grid.
“During heatwave conditions we suspend high-risk activities and maintenance on the units to ensure they run with minimum risk of failure,” AGL Loy Yang general manager Nigel Browne said.
At Victoria’s nearby Yallourn coal-fired power station a 370 megawatt unit was also out of action due to regular maintenance, cutting a quarter of the facility’s 1480 megawatt load.
Owner EnergyAustralia said the works on the facility could not wait and it expected the unit back up and running next week.
“The maintenance had already been postponed on two occasions,” an EnergyAustralia spokesperson said. “This maintenance is required every four to five months and is essential — without it the unit cannot generate at full load and perform to meet the needs of our customers. The three remaining units at Yallourn are operational to help meet the hot weather forecast this week.”
The energy operator’s 435 megawatt Tallawarra gas-fired unit in NSW also dropped out of service on January 17 due to a rupture in a cooling pipe and the company has yet to outline when it will resume operations. “We’re applying all the resources we have available to return Tallawarra to service, but these assets are complex pieces of machinery and, with any work we do on plant and equipment, safety comes first,” the EnergyAustralia spokesperson said.
The supply headache marks another pressure point for the federal government after Prime Minister Scott Morrison indicated reliable power generation and lower power prices were its top priorities last year.
However, the prospect of significant household savings appears more distant, with high wholesale prices to persist longer than original expectations.
Electricity futures prices for 2019 have rallied significantly since lows in June 2018 while spot prices remain “stubbornly high”, according to Credit Suisse, which says higher costs for coal and hydro power have offset a growing contribution from wind and solar.
The rising wholesale price expectations mean that retail margins may face a further squeeze at current levels, making it more difficult for the country’s largest power operators to achieve cuts to tariffs which the government has demanded take shape in mid-2019.