Victoria fears summer energy shock

A delay in bringing a gas plant in Victoria back on line has reignited concerns about electricity availability this summer.

AGL Energy’s Loy Yang A coal plant supplies 30 per cent of Victoria’s power Picture: AAP

A delay in bringing a critical gas plant in Victoria back on line has reignited concerns about the availability of electricity supplies during peak summer demand, amid a call by the energy industry to avoid “kneejerk interventions” should the national grid suffer power cuts.

Origin Energy’s Mortlake gas-fired power station will now resume operations on December 30, marking a 10-day delay and nearly six months after it was forced offline on July 8 following an electrical fault.

The market has been watching the timeline for Mortlake due to warnings the state faces a significant risk of power outages this summer, while power futures ­prices for the state in the first quarter of 2020 remain over 60 per cent above rates this quarter.

One of the units at AGL Energy’s Loy Yang A coal plant — which supplies 30 per cent of Victoria’s power needs — has been cut since June but is due back online by mid-December. AGL said on Monday it had spent $150m on a program to improve its Loy Yang, Liddell and Bayswater coal plants, along with the Torrens gas facility, ahead of summer.

The Australian Energy Market Operator has been forced into increasingly frequent and expensive market interventions, such as leasing diesel back-up generators and ordering expensive gas-fired plants into the market, to guard against the risk of a thermal generator such as  Loy Yang failing or a change in the weather knocking out renewable generation. 

Origin said Mortlake would be returned “in advance of the traditional peak summer electricity consumption period”, with the delay caused by poor weather and problems finding commissioning technicians. Mortlake supplies 3 per cent of the state’s capacity.

Major energy users and producers have also cautioned against moves to tighten the reliability standard to avoid possible blackouts. Federal Energy Minister Angus Taylor and Victoria’s Energy Minister, Lily D’Ambrosio, formed an unlikely accord, pushing for changes to the mechanism at November’s Council of Australian Governments energy meeting. Big buyers including the Ai Group and Energy Users’ ­Association of Australia said policymakers must resist changes that push up costs.

“While it is right for consumers to expect the highest possible performance from our energy system and the businesses that manage it, we should recognise nobody can provide a guarantee the lights will never go out,” the group’s statement said.

The group said the power sector and AEMO must be supported if there are problems this summer: “We must work diligently and dispassionately on understanding the issues and, if necessary and after careful consideration and stakeholder engagement, put in place measures and make appropriate investments that maintain the balance between system ­security and consumer costs.”