Running on empty: Energy regulator warns summer blackouts are ‘significant risk’

Australia’s energy market regulator has warned of “significant risks” to reliability of supply without urgent investment in new sources of electricity and the transmission needed to connect it to consumers.

 Energy prices have spiked but not with the severity of previous seasonal rises. (AAP Image/Dan Himbrechts)

Energy prices have spiked but not with the severity of previous seasonal rises. (AAP Image/Dan Himbrechts)

The warning comes in an Electricity Statement of Opportunities released on Thursday to provide an outlook for the National Electricity Market in the coming decade to help inform planning and policy decisions.

“This year’s report highlights that Australia’s energy transition is happening at pace,” the statement from the Australian Energy Market Operator said.

“Our old coal-fired power stations are retiring, at the same time as demand for electricity is increasing.

“Without urgent and sustained investment in new sources of electricity, and the transmission needed to connect it to consumers, there are significant risks to reliability.”

Roughly 62 per cent of Australia’s coal power stations are expected to be retired by 2023, with unplanned outages from the ageing fleet also posing risks to grid stability.

The statement said planned generation, storage and transmission, supported by government programs “must be delivered urgently”, with any delay likely to put reliability at risk over the coming decade.

It said reliability risks are forecast to exceed standards in several states in coming years, and as soon as the coming summer in Victoria and South Australia.

“This summer has more risk than the last few years. It is forecast to be hotter and drier, meaning that electricity demand will likely be higher. The industry is preparing so it can manage higher demand, but some elevated risk remains,” the statement said.

Director at think tank Climate Energy Finance, Tim Buckley, said urgent action was needed from state and federal governments.

“The message is clear: accelerating the pace of energy transformation and transitioning our grid is critical to ensuring reliable energy supply and solving the current energy crisis precipitated by the hyperinflation of fossil fuels,” he said.

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Energy Minister Chris Bowen said the last five ESOO reports under the coalition government flagged supply concerns, heightened risks from coal outages and the need to incentivise continued supply.

“After a decade of energy policy chaos, the Albanese government is implementing overdue policy reform to deliver a cheaper, cleaner, more reliable energy system,” Mr Bowen said.

“The latest (report) confirms our federal government programs, including Rewiring the Nation and the capacity investment scheme, will improve the strength of the grid and reduce reliability risks.”

Asked if the former coalition government should take any responsibility for the concerning state of the energy system, Liberal senator James Paterson said there was “record investment” in renewables under the coalition government.

As a senator for Victoria, he was unsurprised the state was facing the possibility of blackouts under the Andrews government’s energy policies.

“When you’ve got a state government here in Victoria which is putting extra taxes on coal-fired power generation, that has led to the inevitable circumstances we’re seeing right now,” he said.

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