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Australia's Electricity Market Suspension Will Be Lifted When Prices Fall


23/06/2022


Australia's Electricity Market Suspension Will Be Lifted When Prices Fall
As the country's power crisis subsides, Australia's energy market operator says it will lift its suspension of the country's major wholesale electricity market. The limitations will be lifted temporarily on Thursday until a final decision is reached.
 
Following a price increase, it banned trading on the site in an unusual action last week. Officials in the state of New South Wales also asked residents to conserve energy due to fears about power outages.
 
The state, which has a population of about 8 million people, is home to the country's largest city, Sydney.
 
The Australian Energy Market Operator (Aemo) stated in a statement on Wednesday that it had "seen a clear improvement in market circumstances" and that trade would resume on Thursday at 04:00 in Sydney.
 
It went on to say that it would study the market for at least 24 hours before deciding whether to formally lift the suspension.
 
"We have seen nearly 4,000 megawatts of generation return to service since this time last week, and that means the risk of any shortfall has reduced markedly," Aemo chief executive Daniel Westerman said in a televised media conference.
 
Australia is a major supplier of coal and liquefied natural gas, but it has been dealing with a power crisis since last month.
 
Three-quarters of its electricity is still generated using coal, and it has long been chastised for failing to do enough to reduce emissions by investing in renewables.
 
In recent weeks, the country has felt the effects of coal supply shortages, outages at multiple coal-fired power facilities, and skyrocketing global energy prices.
 
Meanwhile, energy demand has increased due to a cold spell and as Australia's economy opens up following the relaxation of Covid-19 limitations.
 
All of these contributed to wholesale electricity prices rising above Aemo's A$300 per megawatt hour pricing cap.
 
However, that cap was lower than the cost of production for numerous generators, prompting them to reduce capacity.
 
Aemo took the unprecedented step of suspending the market last Wednesday, stating that it would set prices directly and compensate generators for the shortfall.
 
It also requested New South Wales residents to "temporarily decrease their energy usage."
 
Westerman stated at the time that Aemo had "placed the security of the grid and keeping the lights on above all else."
 
"We asked generators to bid their plant back into the system - and that is happening more - giving us greater visibility of generation in real time," he added
 
(Source:www.fbcnews.com)