Power plant failures push Victoria's energy grid close to the edge in November heat

Victoria's late November heatwave has stretched energy capacity to its limit. Photo: Fairfax Media
Victoria's late November heatwave has stretched energy capacity to its limit. Photo: Fairfax Media

Victoria's strained energy network is about to face its first real test of the summer – several days before summer has even started.

This week's mild November heatwave and the recent failure of two coal-fired power units in the Latrobe Valley have drained the state's energy grid of reserve supply and pushed it towards the danger zone for blackouts.

The Australian Energy Market Operator issued two notices Wednesday afternoon forecasting a lack of reserve in the energy grid as the temperature soars towards the mid-30s on Thursday and Friday afternoons.

The level one alerts are a signal that there is a shortage of back-up energy, meaning any further unanticipated loss of capacity or spike in demand has the potential to cause blackouts in parts of the state.

They are not a signal that blackouts are expected, but merely a warning for the energy market to take steps to provide extra reserves.

The alerts have been triggered by a huge drop in capacity at Victoria's Latrobe Valley plants in the past month, due to two sudden system failures.    

On Saturday one of Yallourn's four generation units was switched off after a boiler failed. It is still under repair.

A second unit was switched off months ago for maintenance.

Last month one of four units at the Loy Yang power station failed. It remains under repair.

The two temporary malfunctions at the Loy Yang and Yallourn have reduced Victoria's energy capacity by about 1300 megawatts and  drained the state of more than 10 per cent of its peak period energy supply.

The failures follow the permanent closure of the 1600-megawatt Hazelwood power plant in March.

The dramatic drop in available coal-fired power has forced Victoria to import large amounts of energy from South Australia, Tasmania and NSW this week and to burn more gas, contributing to spikes in the wholesale energy price in the past week.

The price in Victoria has soared from an average of about $80-$90 per megawatt hour this month to well over $200 in this week's heatwave.

Dylan McConnell, a researcher at the University of Melbourne's Climate And Energy College, said right now Victoria's energy network was as low on reserve capacity as it had been in a long time.

"We're really in a very tight supply-demand situation at the moment," he said.

He said the lack of contingency pointed to fragilities in Victoria's coal-fired power supply, caused by ageing plants and a lack of investment by their owners.

Mr McConnell said some of this reluctance was understandable, given the recent extended period of uncertainty about Australia's future direction on energy policy.

"They haven't necessarily maintained equipment as much as they could have or should have, but you don't want to go spending $200 million to $300 million on upgrading kit with no certainty around how long you can operate for," Mr McConnell said.

"A lot of plants are putting off and deferring maintenance schedules because they don't know what their long-term outlook is, which in turn makes them more unreliable."

The Opposition said Victorians were paying for the closure of Hazelwood.

Opposition energy spokesman David Southwick isn't confident on Labor's planning for the state's power supply over summer. Photo: Chris Hopkins

Opposition energy spokesman David Southwick isn't confident on Labor's planning for the state's power supply over summer. Photo: Chris Hopkins

"We hope that Daniel Andrews was right when he assured Victorians that closing Hazelwood would not have any effect on our energy supply," opposition energy spokesman David Southwick said.

"But given his track record on being wrong on our electricity only going up 85 cents a week, we aren't confident."

A year ago Mr Andrews said on 3AW that Hazelwood's closure would push up household energy bills by about 85 cents a week.

Energy Minister Lily D'Ambrosio's spokesman said the government had been notified by the Australian Energy Market Operator that there was ample energy available in the grid and that it was also putting contingency measures in place to safeguard supply over summer.

These contingencies include transporting diesel generators to Victoria and using demand management, a regime where businesses and households are given a financial incentive to switch off power at peak times.

A spokesman for the Australian Energy Market Operator said there was ample energy available in the grid right now and the notices were issued to notify energy market participants that there is an opportunity to provide additional reserve.

The forecast shortage it seeks to fill is 159 megawatts on Thursday and 59 megawatts on Friday. Both days have a forecast maximum temperature of 33 degrees.

A spokesman for Energy Australia, the operator of Yallourn, said the two units that are out of action are expected to be switched back on within a week.

"There are four units at Yallourn, providing total generation capacity of 1480 megawatts," the spokesman said.

"We expect all to be back online over the next week, including one unit which is returning from a major maintenance overhaul."

The Age