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Heatwave brings back generators in Victoria and South Australia

Heatwave brings back generators in Victoria and South Australia

A second dress rehearsal of the Australian Energy Market Operator's summer readiness plan in as many weeks has been averted after the agency's forecasts of potential supply shortfalls during this week's mini-heatwave in Victoria and South Australia drew at least two generators back into the market.

Melbourne is expecting a high of 36 degrees Celsius on Wednesday while Adelaide is facing highs of 36 degrees Tuesday and 38 degrees Wednesday.

These conditions are not as trying as the February heatwave in which temperatures soared past 40 degrees and about 90,000 homes in SA lost power and the Tomago aluminium smelter in Newcastle had to switch off potlines.

But they are an opportunity for AEMO to stress-test its summer readiness plan for stiffer trials later in the summer, as it did two weeks ago when temperatures rose to the mid-30s in Victoria with two coal power units out of action.

That test passed satisfactorily after AEMO called Tesla and Neoen's 100 megawatt battery at the Hornsdale wind farm into service for the first time and activated its Reliability and Emergency Reserve Trader mechanism, which prompted Australian Paper's Maryvale, Victoria paper mill to dial back its consumption.

Generators back in

In anticipation of this week's heat, AEMO posted mid-level forecast Lack of Reserve 2 (LOR2) notifications for both states overnight and cancelled them this morning after, a spokesperson says, a generator bid back into the market in each state and wind conditions improved in South Australia.

AEMO doesn't identify which generators have bid back in. But in South Australia the only generators to do so in the last 24 hours were AGL Energy's Torrens Island A2 and B1 turbines, which bid back in at 8am on Monday and 3pm Sunday respectively.

In Victoria, EnergyAustralia's Yallourn 2 coal-fired turbine bid in at 10am on Monday and Origin Energy's Mortlake number 1 gas turbine bid back into the market at 11.30pm on Sunday.

The companies didn't comment on the reasons - prices were around $100/MWh in both states on Monday and are forecast to top $150/MWh late Tuesday afternoon - but it is understood Mortlake wasn't responding to AEMO's notice.

Exactly how it should work

Victorian Minister for Energy, Environment and Climate Change Lily D'Ambrosio, said, "AEMO has advised that there is an ample amount of energy available within the grid."

Tony Wood, director of the energy program at the Grattan Institute, a think tank, said, "In some ways that's exactly what an LOR2 is supposed to do. It's supposed to elicit that sort of behaviour."

Victoria still has a Lack of Reserve 1 (LOR1) notification in place, which indicates AEMO believes there is room for more generation to come into the market but no danger to grid supply.

An LOR2 indicates a tightening of electricity supply reserves in a bid to encourage more generation to come into the market.

"At this level, there is still no impact to power system security, however AEMO will bring in available additional resources, such as demand response and support generation (such as diesels if required)", AEMO said in an explanatory note last month.

LOR3 means there is an immediate shortfall, and if no more generation comes into the market customers will be asked to curtail their electricity usage - "load shedding".

AMO says it views load shedding as an "absolute last resort".

Financial Review

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