Victoria’s largest power station will restart Thursday as 174,000 await restoration

AGL says Victoria’s largest coal power station will resume operating within the next 24 hours, taking its offline time into Thursday, and the energy market operator has moved to shore up grid stability through emergency intervention.

An estimated 174,000 households and businesses were still without power across Victoria on Wednesday afternoon after Tuesday’s storms caused widespread damage to transmission lines, and electricity generators were unable to dispatch power.

The biggest casualty was AGL’s Loy Yang power station, which shut down in the early afternoon and required the Australian Energy Market Operator (AEMO) to order enforced power shut-offs for about 90,000 people. While AEMO was able to quickly restore services to that cohort, the wind brought down distribution lines and more than 500,000 people were left in the dark.

Storm damage in the Melbourne suburb of Clayton. Picture: David Crosling

By 2pm on Wednesday, Victorian authorities said 174,000 homes and businesses were still without power, and AEMO cautioned that restoration efforts could take weeks.

“Vegetation clearing and repairs to damaged powerlines and poles continue. However, given the extent of the widespread damage, it may take days if not weeks to restore electricity to all of those impacted,” AEMO said in a statement.

The Australian understands Loy Yang was unlikely to be running at its maximum capacity immediately as generation needed to be gradually increased.

READ MORE: Victorian power play ‘undermines’ national market | ‘Volatile’: 500k blacked out after power fail | State will pay AGL to keep lights on | AGL brings forward Loy Yang coal closure by a decade |

Still, the restoration will bolster AEMO’s efforts to stabilise the grid. AEMO on Wednesday said it would exercise its emergency powers to order generators to continue dispatching.

“The direction was necessary to maintain the power system in a secure operating state,” AEMO said in a notice to Australia’s energy market.

The order, used frequently and most notably in South Australia, comes as generators struggle with mixed market signals.

Generators move to adjust their output according to the wholesale electricity price, which rises during periods of high household demand. But, with such destruction, the wholesale price is not providing a true reflection of demand, forcing AEMO to intervene.

Energy executives said the move would shore up Victoria’s grid and prevent an escalation of blackouts, and AEMO’s efforts would be aided by better conditions.

“The scale of destruction is cyclone-like. But the weather is mild and that will see less strain on the grid over the next week,” said one industry executive.

“It is fragile but the system can meet the load.”

With AEMO directing the market, the wholesale price of electricity was in negative territory for much of the day – sheltering households from what sources said could have been higher costs.

The wholesale electricity cost does not immediately flow through to households, instead it is borne by retailers immediately, but it does eventually filter down to households via annual tariffs.

AEMO chief executive Daniel Westerman said that as wholesale costs were now in negative territory, he did not expect any material cost to households and businesses.

“I wouldn’t expect that this has a cost flow-through into people’s bills that is of a significant nature,” Mr Westerman said told reporters in Melbourne.

COLIN PACKHAM