The Australian Energy Market Operator has restored the National Electricity Market to full operation on Friday, with spot trading restored from 2pm, lifting a week-long suspension.
AEMO says it was in a position to recommence spot trading after market conditions showed significant improvement, with a large amount of generation capacity – upwards of 4,000MW – returning from outages.
But the market operator warns that conditions remain “dynamic” and it will continue monitoring developments.
“The current energy challenge in eastern Australia is the result of several factors across the interconnected gas and electricity markets,” AEMO said in a statement on Friday morning.
“These include periods of high electricity demand, coupled with a large volume of generation unavailable due to maintenance or unplanned events, planned transmission outages and high energy commodity prices.”
“Returning to regular operations of the NEM is now possible, as we are currently seeing more normal electricity bidding and dispatching through AEMO’s automated resources, along with reduced electricity shortfalls and fewer manual interventions needed by AEMO.
“AEMO expects conditions to remain dynamic in the short term once the suspension is lifted,” AEMO’s statement adds.
AEMO triggered the unprecedented, NEM-wide, suspension after it deemed the electricity spot market had become “impossible to operate“, with some generators withholding significant volumes of available generation capacity, leading to the apparent threat of load-shedding or wider-scale blackouts.
The situation has been exacerbated by several factors, including high coal and gas prices, a cold snap across much of Australia, and the growing unreliability of some of the largest coal-fired power stations – all combined to put pressure on electricity supplies.
By taking greater control over the dispatch of generators in the market, AEMO has managed to navigate the recent market volatility without the need to cut power to homes or businesses.
The apparent, deliberate, withdrawal of capacity by generators in an attempt to get around an administrated price cap has led to accusations of market gaming and calls for market regulators to take action against energy companies that contributed to concocted shortages.
Speaking from Sydney, federal energy minister Chris Bowen welcomed the return to normal spot market operations and said he would continue to support the Australian Energy Regulator (AER) to take any necessary action against generators found to be deliberately withholding otherwise available capacity from the market.
“The Regulator is the regulator. They have my 100 per cent support,” Bowen said.
“Consumers come first. The regulator’s job is to ensure that consumers are coming first. The regulator has been very strong in their actions, and they have my 100 per cent support as they do so.
“It’s not for politicians to regulate the law, it’s for the regulators to regulate the law and they have my full support as they do so. I’m in constant contact with the generators, and they know the government’s expectations, but there’s a regulator who is the law of the land.”
In its own statement on Friday, the AER sought to remind generators of their obligations to provide information to AEMO about their availability to supply power, and to actively disclose any risks to their availability, including planned and unplanned outages as well as potential disruptions to fuel supplies.
“With the National Electricity Market currently facing considerable challenges, it is essential for participants to provide high quality and timely information to AEMO to ensure it can maintain a safe, secure and reliable power system,” the AER said.
Bowen said the Albanese government recognised the long-term needs of the energy system, including the need to build more renewable energy capacity and storage to mitigate against the risk of future market volatility.
“It’s great to see a return to normal market conditions. We are aware of the long-term challenges, the need to get more renewables and storage into the system – that work will continue, and in the meantime, we are remaining very vigilant to the short term crisis.”
Bowen defended the role of renewable energy projects in the current energy market – responding to claims made by the Coalition opposition that the new Albanese government was ‘spooking’ the market.
“Renewables don’t spook people, and they don’t spook coal-fired powered generators into not working. If the Liberal Party wants to be taken seriously, they might start being a bit more mature about the discussion,” Bowen said.
Bowen refused to speculate about the future of some electricity retailers, with a growing number of casualties from the recent surge in wholesale electricity prices, including the recent collapse of community-owned electricity retailer Enova Energy.
“It will be irresponsible of me to start speculating about liquidity matters. I remain in constant contact with the [Australian Energy Regulator],” Bowen said.
“The government remains very alive to the issues to be considered as the market returns, but I will not start commenting on financial viability.”
See also: Flicker fest: Production halted at Australia’s biggest wind and solar farm after voltage issues
