Industry News


Electricity Shortfalls for the Next Two Summers

Sorted by Robert Barr

Examination of the AEMO short term generation/load outlook for the next two years on the electricity “Medium Term Outlook” dashboard of shows problems ahead for the Australian electricity industry. It currently shows projected reserve shortfalls of generation in Victoria of over 800MW and South Australia of over 300MW. The generation/load balance outlook is very tight in NSW. Queensland and Tasmania appear to be relatively manageable. The Western Australia market with its capacity market in place should be adequate.

AEMO and State and Federal Governments have reason to be very concerned. What is at stake is the possibility of major power blackouts on a scale we have not seen in decades. Next summer will be the first hot spell in modern times that Victoria will have to face without the Hazelwood brown coal power station. While South Australia already has seen the effects of the retirement of the Northern and Playford power stations at Port Augusta, the adverse impacts experienced in recent times could continue for many years.

The fundamental problem is a shortage of despatchable generation to meet the forecast customer demands. No amount of wind and solar PV generation is going to make a material contribution to solving the problem without grid scale storage.

A sign of the level of desperation is AEMO’s recent invitation to large electricity customers to attend capital city information sessions
on participation in the “Reliability and Emergency Reserve Trader” arrangements to support the National Electricity Market. This is an opportunity for large customers to provide additional generation and/or reduce their load at critical times. My experience has been
that while some large electricity users have limited opportunities to voluntarily reduce their loads, the vast majority have production/ operational needs that dictate a need for a continuous reliable supply for viable economic operations. What AEMO will find is that it is not easy to incentivise railway operators, steel manufacturers, shopping centres, food processing operators or most other large energy users to switch off or reduce load on a command from AEMO.

A further sign of desperation is the South Australian government’s commitment to build a 100 MW/129 MWh lithium-ion battery near Jamestown. No five or ten year network planning cycle for this project. This Tesla 100 day delivery or it’s free battery is set to be a milestone in modern day electricity supply system. Whether the 100MW battery can economically make a material difference to the projected 300 MW reserve shortfall remains to be seen.

The other significant indicator that all is not well in the NEM is the sudden price increase in the wholesale electricity market. While I
am seeing small business and domestic customers typically being exposed to 1 July price increases in the order of 15%, large industrial customer being forced to the market now are seeing increases in the order of 75%. South Australia now has some of the most expensive grid supplied electricity in the world. High prices in the wholesale market just reflect the tenuous balance between supply and demand. In electrical terms that is the balance between generation capacity and customer load.

While electricity agencies are working hard to get through next summer, the underlying issues causing the lack of despatchable generation in the NEM remain. If not addressed soon with viable long term solutions, the issues will overwhelm governments, electricity customers and the public at large and cause untold damage to the Australian economy.

Op-ed by Dr Robert Barr AM
EESA National President