Guest essay by Eric Worrall

The South Australian Government been forced to beg fossil fuel operators to bring mothballed plants back online, to contain wild swings in electricity spot price caused by unstable renewable production, prices which last month peaked at $14,000 / MWh – up from more normal prices of $100 / MWh which prevailed before political favouritism towards renewables messed up the market.

South Australia intervenes in electricity market as prices hit $14,000MWh

Turmoil in South Australia’s heavily wind-reliant electricity market has forced the state government to plead with the owner of a mothballed gas-fired power station to turn it back on.

The emergency measures are needed to ease punishing costs for South Australian industry as National Electricity Market (NEM) prices in the state have frequently surged above $1000 a megawatt hour this month and at one point on Tuesday hit the $14,000MWh maximum price.

Complaints from business about the extreme prices – in normal times they are below $100 – prompted the state government to ask energy company ENGIE to switch its mothballed Pelican Point gas power station back on.

The extraordinary intervention – first foreshadowed in December when the government of premier Jay Weatherill hosted an energy crisis meeting – comes as electricity prices soar to near record levels across the nation.

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It also comes as the wider national energy market is in upheaval. Gas prices are surging thanks to a brutal cold snap in the southeast that means electricity price relief from bringing more gas generation back into service could be limited.

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Cold weather and the closure of South Australia’s Northern and Playford coal-fired power stations as wind provides an increasing share of the state’s power have combined to send NEM prices to their highest average levels since the 2007 drought.

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“A planned outage of the Heywood Interconnector to Victoria, coupled with higher than expected gas prices and severe weather conditions have contributed to large-scale price volatility in the energy spot market in recent days,” Mr Koutsantonis said.

“The failure in the energy market has led the Government to ask ENGIE, the owner of Pelican Point Power Station, to run the plant for a short period, providing 239MW of additional supply into the energy market.

“It is believed the increased base-load supply from the previously mothballed plant will lead to improved system security.”

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