Coal-reliant NSW faces rolling blackouts as accusations fly in South Australia

The coal-dependent state of New South Wales faces rolling blackouts on Friday as the extraordinary summer heatwave continues across Australia, and after South Australia’s grid faced similar problems on Wednesday.

The Australian Energy Market Operator warned on Thursday morning that the heat-wave, which will send temperatures soaring as high as 45°C in Sydney suburbs, could mean there is not enough capacity in NSW to meet demand.

It says rolling blackouts, or load shedding, could result, from around 4pm on Friday afternoon.

AEMO made a similar forecast for South Australia on Sunday, but the fact that the state suffered short burst of rolling blackouts – affecting 40,000 people for up to 45 minutes – with the country’s most efficient gas generator sitting idle near Adelaide – has sparked another war of words.

Extraordinarily, the ABC led its coverage with the title “energy minister Josh Frydenberg says he won’t politicise” the blackouts, before quoting him doing exactly that .

Frydenberg blamed the low wind output and the state’s “gamble” on renewables for the grid problems and “yet another example of Jay Weatherill’s failed experiment”.

Prime minister Malcolm Turnbull and others joined in. Later, in question time, Frydenberg blamed the blackout on a “lack of wind”, and Treasurer Scott Morrison brandished a lump of coal.

However, South Australia energy minister Tom Koutsantonis blamed the AEMO – which is a federal body – for not ensuring there was enough generation available, and wondered why it allowed Engie’s 250MW gas unit at Pelican Point to sit idle, while consumers and business suffered forced blackouts.

Koutsantonis was particularly outraged given there was three day’s notice of the potential shortfall. Claiming not enough time to fire up the generator simply didn’t cut it. He and premier Jay Weatheril have threatened to take matters into their own hands, even talking of “nationalising” the industry.

The events – their impact on a high renewables state like South Australia and a coal reliant state such as NSW – underlines the shocking state of Australia’s energy policy.

While Frydenberg jumped into the gutter, and refused to answer questions why the AEMO did not use its powers to ensure Pelican Point was operating, the more reasonable approach would have been to underline the need for a smarter grid rather than dumb politics.

But that has been lacking for years. And as a result, technology  and market solutions have been ignored. Consider demand response – where businesses and others volunteer to reduce their demand (and get paid for it) would be a better mechanism than forced outages. And would likely result in lower grid costs.

There has been a big push for this from experts for years, but policy makers and regulators – at the behest of the fossil fuel generators that control the grid – have been slow to respond. Some rules in support of demand response rules are now in the pipeline, but probably won’t be in the market for another two years.

These mechanisms have existed in Western Australia and most other western markets for years. It’s all about having a smart grid, rather than the dumb one we have now. At RenewEconomy, we’re not sure how many times we need to make this point.

One demand response expert said it would have taken just 100 MW of consumers and businesses enacting demand response to avoid the forced blackouts.

“The spot price was near the market cap all evening, which have sent the market a signal to either increase generation, or reduce demand.

“Unfortunately these wholesale price signals rarely reach demand-side consumers and businesses, because retailers rarely pass those signals on to their customers. Some sort of demand response mechanism in the wholesale market would allow independent specialists to work with consumers to bring their demand response to market, where retailers have failed to do so under the status quo.”

The potential for rolling blackouts in NSW on Friday highlights that this is not a renewables vs fossil fuel issue, but a grid management issue. Load shedding is actually quite a frequent event – it’s only now that the political debate over wind energy, driven by the Coalition, has put it centre state.

According to SA Power Networks, AEMO ordered Wednesday night’ “rotational load shedding’’ at 7pm, due to a “lack of available generation supply” in the state, as South Australian returned home from work and turned their air-conditioners on.

“This issue is due to a lack of generation supply and we are required to operate at AEMO’s instruction,” SAPN said.

But Koutsantonis argues that the national market isn’t working. Energy analysts wondered why 250MW of capacity at Pelican Point was not switched on, and why 100MW of capacity of one of the Torrens Island units – which was running two days earlier – was also idle.

(An AGL spokesperson said the unit was “closed for maintenance”. A Pelican Point release said the unit “was not able to provide a market response under the current rules of the National Electricity Market, (NEM) unless directed by the market operator).”

It seems that this is what the state government wants to know, and threatens to take matters into its own hands.

“We (the State Government) have been taking advice from the market operator and others but after last night we have to reassess. We will do what’s necessary to make sure SA has sufficient generation,” Koutsantonis said.

“It’s my understanding that AEMO (Australian Energy Market Operator) was made aware more generation was available and chose not to turn that generation on. Serious questions have to be asked about why we had generation available that wasn’t used.”

As energy market analyst Paul McArdle has since pointed out, the NEM indeed seems to be running on a “very, very tight supply/demand balance.”

But McArdle has also been keen to point out that this is not a situation that is exclusive to South Australia – nor is it something that should be unexpected by the national market operator during the late stages of an Australian summer.

“It’s important to note,” he says, that AEMO’s NSW load-shedding forecast is exactly that – a forecast. “It’s not actually occurring currently. As AEMO has noted, the market is expected to respond by making more capacity available.”

Back in South Australia, further potential power cuts have been flagged by AEMO for Thursday, which has warned of possible load shedding from 4pm, as Adelaide heads for a top of 42°C and other parts of the state to upwards of 45°C.

AEMO, meanwhile, is said to be delivering an “urgent report” on the latest SA blackouts but, according to Minister Frydenberg, has disputed some claims that it was to blame.

The market operator released a statement on Thursday morning, offering some insight to its course of action on Wednesday night, noting that it had issued “a number of market notices” in the lead up, “requesting a market response to be provided due to increased demand as a result of the high temperatures” in the state.

AEMO said it “did not receive sufficient bids into the market” to avoid the load-shedding.

“AEMO understands the frustration from South Australian energy consumers as electricity is an essential service,” the statement reads. “It is important to note that AEMO instructed load shedding to ease the pressure on the power system, protecting it from potentially impacting more residents, and for a longer period.

“AEMO is continuing to carefully manage the power system during this period of high temperatures and high demand across Australia’s eastern states. AEMO has today published market notices forecasting a tightening supply/demand balance across South Australia and New South Wales over the coming days, and is working with the market to mitigate the need for further load shedding events.”

Note: This story has been updated from its original publication. Please see also: Greedy energy industry, too clever by half, kicks an own goal