Writing in The Australian Financial Review on Thursday, Ms Zibelman said the combination of deteriorating performance of coal generators, insufficient grid interconnection and higher summer temperatures were "imposing unnecessary and costly reliability risk on consumers".

She also said the standards for supply reliability are not focused enough on ensuring adequate supplies on hot days.

EnergyAustralia chief executive Catherine Tanna said on Wednesday there was "no doubt that if it's a very hot summer that things could be quite tight".

She issued a fresh warning that Victoria's targets for 50 per cent renewable energy use and up to 60 per cent emissions reductions by 2030 are putting extra strain on old coal generators such as Yallourn in the Latrobe Valley that are needed to keep the lights on.

The influx of intermittent wind and solar into Victoria's supply system require existing baseload plants to operate more flexibly to fill in the gaps but older generators aren't designed to run that way. It is also causing volatile swings in wholesale power prices throughout the day, again undermining the economics of round-the-clock generators.

"We're going to have to work out what role the older coal-fired power stations have in the new world because they are definitely needed for system stability," Ms Tanna said.

The deteriorating performance of Victoria's ageing brown coal generators, together with the possibility that the AGL and Origin units won't be repaired on schedule, means Victoria won't meet the required standard for supply reliability this summer, AEMO found. Supply in NSW and South Australia will also be tight but will meet standards.


The market operator already earlier this month put out a call for emergency back-up generation across all the regions of the National Electricity Market to try to head off blackouts.

Federal Energy Minister Angus Taylor said that even if the reliability standard was met there was "no guarantee the lights won't go out in Victoria this summer", noting that 200,000 customers lost power last summer when the standard was barely met.

"The Andrews Labor government has created unnecessary risk to the affordability and reliability of the NEM," he said, referring to renewables targets that have triggered a surge of intermittent wind and solar into the system.

Beyond this summer the supply situation has been slightly eased by AGL Energy's decision to slow the final shutdown of its Liddell coal power generator past the 2022-23 summer and to delay the closure of a gas plant in South Australia.

But AEMO forecast only "slight" improvements in supply reliability over peak summer periods beyond 2020 until new transmission lines and on-demand power plants are built.

It said most of the nearly 5000 MW of new plants to be built over the next three years are intermittent renewables, which can't be relied on during peak demand periods and may be in congested parts of the grid. That means their contribution to meeting demand during peak periods is "limited".

After the closure of Liddell, NSW is also expected to be prone to blackouts if preventive action isn't taken, with AEMO forecasting a risk to up to 770,000 households being cut off for three hours during a heatwave.


Backing up concerns by Mr Taylor over the influx of renewables into Victoria's energy grid, AEMO said additional resource capacity of between 125 megawatts and 560 megawatts was needed to boost the reliability of Victoria's state's power network this summer.

While both AGL's 500 megawatt Loy Yang 2 and Origin's 259 MW Mortlake unit are supposed to resume operations in December, AEMO said previous experience with similar plant failures left it pessimistic about that prospect.

It forecast a 30 per cent likelihood of Loy Yang A coming back online on time and a 60 per cent chance for the Mortlake unit.

"If both generator outages extended over the summer and no additional supply was secured, involuntary load shedding may be experienced in Victoria during extreme weather events, equivalent to between 260,000 and 1.3 million households being without power for four hours," AEMO said.

Delays to starting up new wind and solar plants "could further heighten supply scarcity risks across all NEM regions", it cautioned.

The ACCC gas report found there would be sufficient supply to meet forecast domestic and export demand in 2020 but that prices are not falling in the southern states.

It expects east coast suppliers will produce an additional 113 petajoules of gas while demand from gas-powered electricity generators will be 16 petajoules lower.

The ACCC report to be released on Thursday found LNG producers expect to have an additional 92 petajoules in excess of their contractual commitments (168 petajoules in total) which is likely to act as a buffer should domestic demand on the east coast be higher, or gas production lower, than actually forecast.


"The supply forecast provided by gas producers and AEMO's domestic demand forecast indicate that there will be sufficient gas produced in the southern states to meet demand," the ACCC said.

"However, the supply-demand balance in the southern states for 2020 is tight."

The ACCC found the prices offered by gas producers in Queensland for 2020 were lower but that wasn't reflected further south.

In the first quarter of 2019, the prices offered by retailers in the east coast gas market have remained in the $10-$12 a gigajoule range.