Generator bidding averts energy shortfalls in South Australia and Victoria

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The Australian Energy Market Operator’s Summer Readiness Plan was tested for a second time this week and did its job as generator bidding addressed potential shortfalls in energy supply.

AEMO forecast potential energy shortfalls due to the heatwave temperatures of 36-38 degrees Celsius which are affecting the South Australia and Victoria.

Two weeks ago, the plan was also put into action as AEMO called Tesla and Neoen’s 100-megawatt battery at the Hornsdale wind farm into service for the first time. This, coupled with the activation of the Reliability and Emergency Reserve Trader mechanism, which prompted Australian Paper’s Maryvale, Victoria paper mill to dial back its consumption, addressed this particular instance.

Generator bid back in

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

AEMO did not 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 8 am on Monday and 3 pm Sunday respectively.

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

The companies didn’t comment on the reasons – prices were around $100/MWh in both states on Monday.

How the system works

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 said, “In some ways, that’s exactly what the 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.

A LOR2 status 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 diesel 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”.

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