The Australian Energy Market Operator has kicked off emergency measures to protect power supply after Victoria's Loy Yang B brown coal-fired power station failed on Thursday afternoon, sending electricity spot prices soaring.

As temperatures rose around southern Australia Loy Yang B's generators failed at around 4pm, instantly taking around 528 megawatts of energy out of the state’s grid.

The outage ahead of a major heatwave on Friday came despite assurances by its owner Alinta Energy that the ageing power station had the capability to continue providing power in the heat.

“There are no issues expected ahead with the forecast hot weather,” Alinta Energy chief executive Jeff Dimery told Fairfax Media on Monday.