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AEMO triggers emergency reserves to cope with heatwave in Vic and SA

AEMO triggers emergency reserves to cope with heatwave in Vic and SA

The Australian Energy Market Operator triggered emergency reserves to prevent black-outs in Victoria and South Australia on Friday afternoon as soaring temperatures put pressure on the grid.

The use of demand response or the "reliability and emergency reserve trader", where 14 big industrial users help generate power or cut their usage, showed the seriousness of the heatwave hitting South Australia, Victoria and NSW.

It is to help ensure the power network could cope with businesses and households reaching for their air-conditioners as temperatures topped 40 degrees celsius.

It is the second time demand response has been used this summer, after the energy market operator activated the contracts briefly on November 30 in Victoria, with three providers delivering 112 megawatts of power, but Friday afternoon's heatwave was the first major test of AEMO's new summer preparedness program.

AEMO called for back-up power reserves in Victoria on Friday afternoon - understood to be about 240 megawatts - although the start of a cooler change eased pressure on the power grid.

The market operator was confident there would be no load-shedding or black-outs in Victoria and SA , despite it engaging its three-level "lack of reserve" measures for the two states - which is basically a plea for market providers to increase their generation to help make up for the shortfall.

"We have been planning for conditions like today, with a focus on ensuring an operating buffer to manage unforeseen incidents across the power system," AEMO chief executive Audrey Zibelman said on Friday.

"We now have a range of dispatchable resources that can be used to strategically support the market as required, including battery storage, diesel generation and demand resources."

Wholesale electricity prices topped $10,000 a megawatt hour in Victoria and $13,000 a megawatt hour in South Australia by mid-Friday afternoon.

The energy market operator declared a LOR 2 for Victoria for Friday afternoon saying the contingent capacity reserve required was 560 megawatts, with the minimum reserve available being 287 megawatts - leaving a shortfall of 273 megawatts.

LOR 2 signals a tightening of supply reserves and is usually when AEMO brings in additional resources, such as demand response and support generation, such as diesel, if required. LOR 3 signals a deficit in the supply/demand balance which could result in load-shedding or black-outs if there is no adequate market response.

There was also a lack of reserve in SA which experienced temperatures in the mid to low 40 degrees. The heat forced the cancellation of an amateur ride linked to the Tour Down Under, but the professional riders had to struggle on through the almost unbearable heat.

Severe thunderstorms predicted for SA late on Friday afternoon also forced AEMO to restrict the flow of electricity on the interconnector between Victoria and SA, saying it posed an "added risk" to the power system.

Ms Zibelman, who took up the job in March last year, has locked in 1500 megawatts in "demand response"or back-up reserve from 14 companies which can be called on over the summer period if required.

The big industrial users in Victoria and SA, such as Alcoa's Portland aluminium smelter, Bluescope Steel and the Whyalla steelworks, will be paid by the market operator to provide emergency relief to help stabilise the power network when it comes under pressure this summer.

The list of companies also includes a paper mill in Albury NSW, SA's own power network, energy retailer AGL, specialist demand response software company EnerNOC, the Laverton steel mill, Visy, Aggreko diesel generators, and Victorian power networks (CitiPower/Powercor).

SA experienced about five major blackouts last summer including the whole state being cut off from the National Electricity market in September 2016 after a storm cell hit the state. NSW narrowly avoiding widespread blackouts in February after an aluminium smelter in Newcastle curtailed its production by 30 per cent or 300 megawatts to ease pressure on the network.

Financial Review

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