AEMO seeks emergency reserves as coal outages increase across NEM

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AEMO seeks bids for emergency reserves as it prepares for another hot summer, and as coal plant outages in Victoria and Queensland jump dramatically.

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The Australian Energy Market Operator has put out a call for reserve and emergency trading options across all five state grids in the National Electricity Market as it reports a dramatic and unwelcome increase in the number of coal outages in the last three months.

The call-out for proposals was issued by AEMO on Thursday, seeking expressions of interest within three weeks for its Reliability and Emergency Reserve Trader (RERT) facility, which plays a critical role if the operator faces the potential combination of searing heat-waves and the failure or absence of key generators.

The RERT mechanism last summer was activated in both South Australia and Victoria, although the available reserve was not sufficient to stop some load shedding in Victoria.

AEMO now seeks RERT options in NSW, Queensland and Tasmania as well, as it did last year, which suggests it is concerned about supply at critical events.

AEMO is due to release its annual forecast, known as ESOO (Electricity Statement of Opportunities) sometime soon, which may shed more light on where it sees the risks this coming summer.

The RERT will likely play a critical role this year, given the prolonged absence in Victoria of both the Loy Yang A2 brown coal unit and the Mortlake 2 gas unit, which are both off line until December.

New data released by AEMO on Friday notes the huge increase in outages in Victoria’s brown coal fleet, and in Queensland’s relatively youthful black coal fleet.

The first graph above also shows the average outage days per unit of the brown coal fleet has jumped to 18 days, and availability is also low across all three major brown coal generators, now at its second lowest on record. Loy Yang B, the youngest brown coal generator, was unavailable one third of the time. So much for reliable baseload.

“In Q2 2019, average brown coal-fired generation was 573 MW lower than in Q2 2018 due to an increase in planned and unplanned outages.” AEMO noted in its Quarterly Energy Dynamics publication.

The story was not much better in Queensland, which recorded its lowest average output of 5,693MW in the last three years, which AEMO blamed on increased unplanned outages, the length of those outages, and the impact of rooftop solar.

The RERT mechanism is termed ‘off-market’ as the generation or demand response sits outside the wholesale electricity market. It inlcudes generation that does not normally operate through those markets, and can include demand response, where energy users get paid to use less electricity at critical times.

“Participants may be contracted by AEMO to either use less energy or generate power from their own generators,” it said in a brief statement. “Aggregators may also be contracted to procure demand response from electricity users.

“Suitable reserves are generation assets (such as standby diesels) or load reduction in excess of that normally available to the NEM.”

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