AEMO switches power to take over energy management

by John J. Williams

The Australian Energy Market Operator (AEMO) has suspended the spot market in the National Energy Market (NEM) for the first time in Operator history.

The spot market is what AEMO uses to match the electricity supply from power plants to the real-time consumption of households and companies.

The NEM includes Queensland, Victoria, South Australia, NSW, and the ACT.

AEMO switches power to take over energy management

Announcing the suspension, AEMO CEO Daniel Westerman said the market operator took the step because it had become “impossible” to continue operating the spot market while ensuring a safe and reliable supply of electricity to consumers by the national electricity rules.

Mr. Westerman said that the day before the suspension was announced (June 14), the AEMO was forced to lead five gigawatts of generation through direct intervention. Operating reliably in the spot market or the electricity system was no longer possible.

“In the current situation, the best way to ensure a reliable electricity supply for Australian homes and businesses is to suspend the market,” said Mr. Westerman.

“The situation in recent days has presented challenges for the entire energy sector, and suspending the market would simplify operations during the significant power outages in the energy supply chain,” he said.

“Right now, the market cannot handle all the factors.

“Frankly, those factors are pretty extreme, ranging from generators having planned and unplanned outages to very high demand.”

Mr. Westernman said price caps, significant unplanned outages, and challenges in the coal and gas supply chain hae caused generators to take capacity off the market.

The Chief Executive said this was understandable, but with the large number of units out of service and the early onset of winter, the reliance on clues had made it impossible to continue normal operation.

He said the current energy challenge in Eastern Australia results from several factors in the interconnected gas and electricity markets.

Mr. Westerman indicated that in recent weeks the NEM had seen a large number of generating units in the electricity market out of action for planned maintenance; planned transmission failures; periods with little wind and solar energy; approximately 3000 MW of coal-fired generation out of action due to unplanned events; and an early onset of winter, increasing demand.

“We are confident that today’s actions will deliver the best results for Australian consumers, and if we return to normalcy, the market-based system will once again deliver value to homes and businesses,” he said.

“The market suspension is temporary and will be reviewed daily for each NEM region.”

Mr. Westerman said that if circumstances changed and AEMO could again operate the market under normal rules, it would do so as soon as possible.

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