New South Wales is facing a possible power blackout on Friday as the state’s electricity system struggles to cope with soaring temperatures.

As Coalition and Labor frontbenchers sparred over the latest blackouts in South Australia, the power market operator warned on Thursday that Australia’s most populous state will run out of electricity between 3-5pm on Friday unless generators step in with the offer of more supply.

NSW faces a shortfall of 264 megawatts on Friday, the Australian Energy Market Operator warned, putting the power supply of hundreds of thousands of households and businesses at risk amid forecast temperatures well above 40C in many parts of the state.

An electricity shortage in South Australia on Wednesday caused blackouts for 40,000 people. Ameo said it issued an appeal for more supply six hours in advance of the cuts but the warnings failed to motivate gas generators in the state to meet the demand, leading to claims they are gaming the system.

The blackout prompted the prime minister, Malcolm Turnbull, and the energy minister, Josh Frydenberg, to renew their attacks on the Weatherill government, and on the use of renewable power in the state.

At question time in Canberra, treasurer Scott Morrison brandished a piece of coal at the Labor bench to amplify the Coalition’s claims that Labor-run South Australia put the power supply in jeopardy.

“The South Australian Labor government is switching off jobs and switching off lights and switching off air conditioners and forcing Australian families to boil in the dark as aresult of their dark ages policies,” Morrison declared in question time on Thursday.

But power cuts in Liberal-run NSW, which has the least renewable capacity in the country, could shift the focus onto how the market functions.

Aemo first announced the forecast for NSW at 4.43am on Thursday, forecasting a 19MW shortfall for half an hour on Friday, and requesting the market to offer more supply. At 12.57pm, Aemo issued another level three alert – its highest level – forecasting a two-hour shortfall of 264MW, again asking the market to respond.

In a statement on Thursday afternoon, it said: “High temperatures across the eastern states is increasing electricity consumption levels in South Australia and New South Wales, placing additional strain on the national power system. This has resulted in reduced generation reserves within these two states.

“Aemo is in discussion with a number of generators within New South Wales and the New South Wales government to mitigate the need for local load shedding. Load shedding can sometimes be required when there is an imbalance between electricity demand and electricity supply. When there is a shortfall in the electricity supply, there can be a need to reduce demand very quickly to an acceptable level, or risk the electricity network becoming unstable.”

The South Australian energy minister, Tom Koutsantonis, on Thursday blamed gas generators and failing market rules.

.@JoshFrydenberg says the reality is that @JayWeatherill's renewable experiment in South Australia has failed and he needs to admit it. pic.twitter.com/uQEXGaoCJ9 — Sky News Australia (@SkyNewsAust) February 8, 2017

Energy experts have also said the blame lies with gas generators and market rules.

“You’ve got Pelican Point sitting there – the most efficient gas generator in the national electricity market – and it’s very much underutilised,” said Dylan McConnell from the Melbourne Energy Institute at the University of Melbourne. “That’s a commercial decision. Engie decided not to re-contract as much gas, as a result of the impact of the export market market on gas prices,” he said.

Bruce Mountain, an energy economics consultant at CME, said the underlying cause of the blackouts on Wednesday were the same as those behind what happened in July last year, when low supply led to massive spikes in wholesale electricity prices.

“When the renewables are not operating flat out or making enough electricity, the fossil fuel generators have the market to themselves. And as we know from studies that I’ve done from 2008 onwards they can and do corner the market,” Mountain said.

After the July price spikes, Mountain’s analysis showed electricity generators were withholding supply in order to push up prices. “This is just classical market cornering,” he said. “If you decrease your output by half but as a consequence increase your price by a factor of ten, you’re better off decreasing your output.”

In South Australia, when Aemo put out the first of their warnings at 12.47pm on Wednesday, they said they were expecting to be about 100MW short of their required contingency capacity.

Throughout the afternoon, Aemo released increasingly urgent notices, eventually directly asking the market to respond just before 5.15pm.

In a statement released today, an Aemo spokesperson said the market did not respond, causing the blackout. “AEMO did not receive sufficient bids into the market to maintain the supply/demand balance in South Australia,” the spokesperson said.

As a result, Aemo ordered the transmission networks to cut supply to avoid damage to the network.

Engie, the operators of Pelican Point, said the second unit at the generator “is not able to provide a market response under the current rules of the National Electricity Market”.

meanwhile in australia pic.twitter.com/fUXfLnVMNb — a beeb (@espurrkawa) February 8, 2017

A spokesman for AGL, which operates another gas power plant in South Australia said: “During the load shedding on 8 February, AGL was running the seven available units to the maximum of their capacities at the Torrens power station.”

The prime minister has argued that ideology needs to be removed from the energy debate, and all technologies, including coal, need to be on the table in order to supply secure reliable baseload power at reasonable prices.

But the federal government last year ruled out the policy mechanism that most experts believe will deliver technology neutral emissions reductions at least cost to households – carbon trading – because of ideological opposition to that mechanism inside the Coalition party room.

The government has also been emphasising the importance of gas in the energy mix, and has been critical of state moratoriums on coal seam gas, but the Nationals have also been significant opponents of CSG development because of the encroachment on prime agricultural land.

On Thursday, the deputy prime minister, Barnaby Joyce, said opposition to CSG development in the bush would ease if “a fair return goes back to the landholder”. He said farmers should reap a percentage return from the gross earned at the wellhead.

“And that means that farmers have a huge financial benefit if they are basically in partnership with the resources that come off their place,” Joyce told the ABC on Thursday.

“So if you cut a good deal with the farmers, then I think – as long as you’re not destroying aquifers and you’re not destroying prime-ag land – then I think you can find a happy medium in this debate. Because everybody wants to make a buck. Talk to them where they listen most and that’s through their wallet.”