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AEMO suspends national electricity market to keep lights on

Posted: 15 June 2022 3:54 pm
News
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The Australian Energy Market Operator has stepped in to ensure most households and businesses don't face blackouts.

Update 22 June 2022: The Australian Energy Market Operator (AEMO) has announced it will begin to lift the suspension of the National Electricity Market (NEM) in stages beginning at 4am 23 June. Learn more here.

AEMO has made the unprecedented decision to suspend the spot market in all regions of the NEM from 2:05pm AEST under the National Electricity Rules (NER).

The states impacted include Queensland, New South Wales, South Australia, the ACT and Tasmania.

Long story short, this move will help avoid blackouts as the AEMO takes over pricing and control of power plants. This makes sure enough energy is available to meet demand.

AEMO CEO Daniel Westerman explained that it's no longer possible to reliably operate the spot market or power system through the usual NER.

"In the current situation, suspending the market is the best way to ensure a reliable supply of electricity for Australian homes and businesses," he said in a media release.

"The situation in recent days has posed challenges to the entire energy industry and suspending the market would simplify operations during the significant outages across the energy supply chain.

"We are confident today's actions will deliver the best outcomes for Australian consumers. As we return to normal conditions, the market-based system will once again deliver value to homes and businesses," he said.

This is the first time the AEMO has suspended the market on a national level. Tasmania and South Australia faced a similar suspension last year.

NSW alert dodged

The AEMO was asking asking consumers in NSW to be conservative with their energy usage last week when supply and demand remained tight.

However, the state's dodged the bullet after the NSW treasurer and energy minister, Matt Kean, was granted special powers to force coal companies to provide fuel to electricity generators.

What exactly is the spot market?

All electricity supplied to households and businesses is sold at a "spot" price to retailers.

Both power supply and demand are matched in real-time through a central system that is managed by the AEMO so no one ever goes without power.

Why has the AEMO suspended the spot market?

The electricity sector has been dealing with skyrocketing costs, forcing the AEMO to cap prices and intervene in getting generators to offer power. The gist is that AEMO's intervention will make sure supply and demand are met in a timely manner.

Apart from that, the AEMO has also cited other reasons for suspending the spot market. These include the following:

  • There are a large number of power generation units out of action for planned maintenance. This is usually expected during shoulder seasons.
  • There have been planned transmission outages.
  • Solar and wind output have been at a low during some periods.
  • There are around 3,000MW of coal-fired generation out of action through unplanned events. States on the east coast are especially reliant on power generated from coal so this has been a big problem.
  • The cold snap hit Australia ahead of schedule, increasing the demand for both electricity and gas.

You can read about Australia's energy crisis and what it means for you in more detail here.

How long will the suspension last for?

The suspension will be reviewed each day by the AEMO to decide whether it continues taking charge of directing energy supplies from generators to the power grid.

Worried about your energy bills? Consider getting on a fixed rate energy plan to avoid 1 July price hikes.

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We've updated this story with the most recent news coming out of NSW.

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