It was telling Australia’s energy market operator delayed its “summer readiness” media statement last week because its managers were busy ensuring the New South Wales grid got through spring without mass blackouts.
Politicians had left it until noon on Wednesday to plead with people to throttle their air-conditioners to 26C and delay washing clothes or dishes for five hours, to “help maintain a reliable [power] supply for NSW consumers”.
The severe heatwave conditions had hardly crept up on the state. A full week earlier, the intensity and duration of the season’s first notable scorcher were largely foreseen.
The Australian Energy Market Operator (Aemo)was already issuing the first of seven of its highest urgency alerts – lack of reserve level 3 – for NSW. Each sought a response from a market hamstrung by almost 6 gigawatts of coal- and gas-fired generators offline in eastern states for planned and unscheduled maintenance, with half in NSW.
Demand for power was expected to climb, along with the mercury. Media mavens describing the heat as “mild” clearly weren’t toiling in Sydney’s sprawling west.
Penrith, by the Hawkesbury River, would swelter with five consecutive days exceeding 35C, including Wednesday afternoon’s 39.9C top. Such a run hadn’t been recorded for November previously, the Bureau of Meteorology said.
Blackouts, also known as load-shedding, were avoided. “Aemo managed it well,” the federal energy minister, Chris Bowen, would say the following morning.
“They instituted all of the various weapons they have at their disposal, and we had enough energy to get through the afternoon and evening,” he said. “But things were tighter than usual.”
Indeed, very much tighter, according to Watt Clarity and energy specialists such as the University of NSW’s Dylan McConnell.
The powering down of a potline at Tomago, Australia’s biggest aluminium smelter, spared the grid 300 megawatts of demand during a critical four hours; as did payments to big users to turn off about 70MW of demand under an Aemo scheme.
“It was very close,” McConnell says. “It could have gone either way.”
He pointed to the declaration of an actual lack of reserve level 2 (LOR2) for 75 minutes from 4.30pm (AEDT) when the market was providing about 273MW less reserve than Aemo had demanded. Wholesale power prices spiked to their maximum $17,500/MW-hour.
“LOR2 is when we don’t have enough reserves,” McConnell said. “If something goes wrong, we’re not fine.”
With an election looming, the Albanese government will be hoping the grid can weather the summer.
To a degree, the government inherited some of the present predicament. As Bowen and other ministers routinely argue, the national electricity market (NEM) shed 4GW of dispatchable generation - plants that can be switched on or off - in the decade before they took office. Only 1GW was added.
Indeed, Bowen this week announced the team to review the NEM beyond 2030 when most remaining coal plants will be shutting. Given the long – and lengthening – lead times to get new transmission lines and projects like Snowy 2.0 completed, the sooner serious planning begins the better, analysts say.
The near-term focus, though, will unavoidably be the coming months. An extended heatwave sweeping enough to simultaneously bake Melbourne and Sydney – or Sydney and Brisbane – will strain power supplies particularly if it arrives before Christmas or after late January when schools and businesses are active.
According to Aemo data from 26 November, so-called low reserve conditions will be in place for NSW from December to February, and for Victoria from January to March. During those periods, “forecast demand exceeds supply under some circumstances”, Aemo predicted.
Victorian authorities this week said their grid had held up well. Winter remained that state’s biggest challenge as gas supplies from Bass Strait dwindle, one senior official said.
Half of Victoria’s biggest plant, AGL Energy’s Loy Yang A, should also be back from maintenance by mid-December, restoring its 2,210MW full capacity, a company spokesperson said.
While Victoria annually exports roughly the same amount of gas as it imports, production and storage limits make repeats of last winter’s shortage possible if not likely. Aemo has forecast domestic shortages may occur from 2026 even though eastern Australia exports about 71% of the production of the fossil fuel.
With expensive gas often setting the spot wholesale market price for electricity as the “merit order” bidder that all suppliers get paid, households and business end up paying more for their power. (One reason the Victorian government bans new houses from connecting to gas.)
Import terminals mooted for Victoria and NSW may help ease pipeline capacity constraints but these won’t come cheap for consumers either – and are years off, officials say.
In NSW, more coal-fired generation capacity is on the way just in time as temperatures in Sydney’s west climb back towards the mid-30s for at least five days in a row from Monday.
AGL said unit 3 of its Bayswater plant should return 685MW of capacity from Saturday after unplanned work to repair a tube leak. Unit 2, of similar size, is due back 8 December, the spokesperson said.
Origin Energy’s Eraring, Australia’s biggest coal plant, should resume full capacity when its 720MW unit 3 resumes operations this weekend, a spokesperson said.
Delays completing Snowy Hydro’s Hunter gas-fired plant near Newcastle, though, mean its 660MW plus probably won’t be ready by January, as recently hoped. Instead, the first unit won’t be operating until April and the second until June, the AFR reported.
“I think there’ll be a lot of people wishing that [plant] was around,” McConnell said, noting it was promised by the Morrison government to be online from 2021.
As to whether the NEM – which stretches from South Australia to Tasmania and Queensland – can muddle through the summer without major outages “is a toss of the coin”, he said.
“You can imagine a scenario where we don’t have extended heatwaves, and things are fine,” McConnell said. But with unexpected failures as plants age and climate change makes extreme heat more likely, “there’s a considerable risk something could go wrong”.
