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Failed gas unit caused biggest spike in electricity price, regulator says

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The biggest spike in electricity prices in South Australia in the last week of June was caused by the failure of a unit at one of the state’s biggest gas generators, according to the latest report by the Australian Energy Regulator.

Screen Shot 2016-07-24 at 9.26.42 pmThe AER is required to issue a report each week on the cause of unusual price movements. Its report for the week ended June 25 has just been released, nearly a month later, and notes that the biggest spike in prices occurred late on Friday, June 24, when the price in one interval surged above $1500/MWh.

torrens islandIt says the cause of this was the delayed return to service of unit 4 in the Torrens A gas fired power station, which had tripped earlier in the day, taking it out of service.

The AER says this effectively reduced available supply in South Australia by 120MW. And because there were network issues that were causing constraints in available capacity elsewhere in the network, this forced the dispatch price leap from $300/MWh at 6.10 pm to $1527/MWh at 6.15 pm.

Prices returned to below $150/MWh for the remainder of the trading interval, but the average price remained at just below $500/MWh, the highest for the week.

The AER reports for previous weeks also noted most of the major price spikes were caused by the unexpected loss of capacity at various coal and gas plants, including the Eraring coal generator in NSW, and the Loy Yang B brown coal generator in Victoria.

On top of this, capacity at two gas plants was withdrawn at the last moment because the operator decided it would not be economic to switch them on. And of course, there were record gas prices which pushed up the price of gas fired generation.

So, it’s not all the fault of wind energy or the lack of it, as the mainstream media and the fossil fuel lobby would have you believe. The AER reports for the following weeks, when the price surged to even higher levels, should make interesting reading.

  

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  • drjas

    The gas price problem was evident to some observers nearly two years ago…
    http://www.industry.gov.au/Energy/EnergySecurity/nesa/Documents/ExtremeweatherandNEMscenarioreport2014.pdf

    5.4.5 Peaking gas generation risks

    “Gas supply costs are expected to increase substantially as a result of the construction of large scale LNG facilities in Queensland. A possible risk is that gas supplies are difficult to obtain, if available supplies have been pre-committed to export markets. In addition, if annual output and gas consumption is lower, unit gas supply costs (including transmission) are likely to be more expensive. This could further raise the cost of supplying demand during extreme heatwaves.
    “The threat to gas generation is in part wholesale price related, along with rising production costs. Unlike the balance sheet issue discussed above, this appears to be a significant threat and should not be set aside.
    “The problem is illustrated in the decision by the owners of the Pelican Point to withdraw half the capacity from the market at the end of July 2014. The scenario modelling highlights that the supply-demand balance in South Australia is the most sensitive. The withdrawal of part of Pelican Point’s capacity increases energy security risks in South Australia.”

  • Malcolm M

    Peaking gas plants have until recently had the benefit of plenty of spare capacity in the gas supply system. Now that the export plants are soaking up this capacity under long term contracts, peaking gas plants really need to store some gas on-site as LNG to avoid competing together on the spot market. The additional cost of gas storage would then need to be factored into the bid price for electricity.

    If peaking gas plants need to add the cost of energy storage, the costs would then come closer to that of pumped storage hydro. It is a pity that the RET only pays for energy, and that there have not been similar incentives to build energy storage into the electricity system.

    Victoria has been relatively less affected by high electricity prices while the gas price was high, because of the large amount of hydro available for peak use. This is about 1000 MW, the largest station being Murray in the Snowy scheme.

  • Black_Texta

    isolated shutdowns etc have always played a part in the network, and there has been fluctuations.. but its nowhere near the amount wind fluctuates.. all you need to do is study the average South Australian daily power prices between April (before the closure of PA) and July to understand that there is a trend of increasing rates..SA needed another interconnector to be built, and the Heywood interconnector needed to be upgraded prior to the shutdown of PA to maintain base load requirements, competition and prices, to blame peaking plants for not coming on line when its not viable or the return is not great enough really does exhibit naivety in the extreme. Gas supply will stabilize when NT is connected through to Qld. SA finds itself in the current predicament purely due to poor planning and policy by the state Labor Govt.