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Jun 17 2022

Generator bidding during NEM crisis

The peak body for power generators, the Australian Energy Council said claims of power generators seeking to profiteer from recent market conditions were wrong.

The AEC’s Chief Executive, Sarah McNamara, said extreme conditions in the National Electricity Market in recent weeks led to the automatic imposition of a wholesale price cap last Sunday.

“In these conditions, the price cap proved counter-productive, because it seriously interfered with the market’s functioning.

“This ultimately forced the Australian Energy Market Operator (AEMO) to suspend the market on Wednesday, which the AEC understands, and hopes will reset the market.

“When the cap was applied generators and large-scale batteries were faced with difficult decisions on how to operate. Some withdrew their capacity from the normal dispatch process but remained available to be directed back into the market by AEMO.

“There is a widespread view that this withdrawal is related to generator profiteering around different forms of available compensation. The AEC rejects that view,” Ms McNamara said.

Whilst the cap was in place, generation with limited fuel or water stocks and large-scale batteries with limited energy reserves were being dispatched in such a way that their stocks or energy reserves would quickly exhaust. If this were allowed to continue, a more serious issue for the power system would develop in time. To prevent this, generation and large-scale batteries had to be removed from the normal dispatch process.  

The AEC understands this removal was done in communication with AEMO.

Ms McNamara said: “Following the market suspension, AEMO is effectively managing these limited fuel stocks, and we understand generators are progressively re-presenting their availability into the normal systems which will assist AEMO’s oversight of the grid.

“After a period of re-stabilisation, the AEC expects the market to be able to successfully restart without the price cap in place.  All parties agree that throughout this time collaboration and communication between industry and AEMO has been excellent.

“The Australian Energy Council emphasises that this has been an extremely challenging time for all involved in the energy sector, including generators.

“We are pleased to note that since Wednesday we have seen the return to service of some 1,900MW of coal plant previously under maintenance. Generators are working around the clock to return more plant as soon as possible.”

About the Australian Energy Council

The Australian Energy Council is the peak industry body for electricity and downstream natural gas businesses operating in the competitive wholesale and retail energy markets. AEC members generate and sell energy to 10 million homes and businesses and are major investors in renewable energy generation. The AEC supports reaching net-zero by 2050 as well as a 55 per cent emissions reduction target by 2035 and is committed to delivering the energy transition for the benefit of consumers.

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