Energy crisis: Why Victorians are being warned to expect blackouts

Victorians are being warned there may be blackouts tonight as energy generators pull their supply from the grid.

The Australian Energy Market Operator was forced to direct power producers to come online in Queensland and NSW to avoid outages last night, and a similar step is likely to be required tonight in Victoria.

The market operator has issued a “lack of reserve notice”.

“That means there is a chance that if some units break down, and/or if demand goes up sharply for some reason, there may be what’s called a lack of reserves,” Climate Change and Energy Deputy Program Director at the Grattan Institute, Alison Reeve, told told Ross and Russel.

“That can mean you do get blackouts.”

Some coal generators are holding back their generation from the market because of a price cap the market operator put in place last week to protect consumers from high prices.

If they hold back until they’re directed to run, they’ll be compensated and receive a higher price for their energy.

Power companies have reduced the volume available in the past two days by two gigawatts in Victoria, three gigawatts in NSW, and 1.5 gigawatts in Queensland. The east coast energy grid’s total generation capacity is 55 gigawatts.

“There are units that are available that are not coming online when they’re needed,” Ms Reeve said.

There is no law stopping power companies for withdrawing generation from the market, but the market operator yesterday issued a warning to generators telling them if they’re gaming the market they’ll face penalties.

Ms Reeve says there’s a perfect storm fuelling the energy crisis.

“There’s a number of factors that are all coming together at one point in time at the moment. We’ve got the fact that our coal and our gas markets are both linked to international prices, and those prices have gone up, we’ve had coal shortages on the east coast because of flooding, we’ve had a cold snap, we’ve had a number of coal units that are out of commission not because they are withholding capacity but because they’re undergoing maintenance or repairs, there’s just been more than usual of that,” she said.

“What hasn’t helped is we’ve had 10 years where people have been trying to reform the market to make it more responsive and to get the amount of renewable energy in that we would like to have … and that has been tied up in politics.”

Press PLAY below to hear what’s fuelling blackout warnings

Executive director of one of Australia’s largest power companies, Alinta Energy, Daniel McClelland, admits we’re in a “fragile” position.

He says a lack of forward planning as more of the country’s energy transitioned to renewable sources is to blame.

“The challenge with that is as we’ve continued to introduce that we’ve really left no signal, or very little signal, for the baseload coal or for the mid-merit gas to continue to invest in their plant and to continue to invest in their long-term fuel supply,” he told Neil Mitchell.

“We haven’t done is a great job of investing in the backup generation.”

Press PLAY below to hear what Mr McClelland thinks is to blame for the crisis