We continue to see the downfall of renewable sources of energy being not always available....hence the increasing need for efficient and effective energy storage. The more governments and large reasources depend on renewables the more energy storage is needed. Creating a space for AVL and VRB's to flourish.
SA reels from $14,000MWh power price surge
By Ben Potter
July 14, 2016, 6:52pm
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The National Electricity Market is in turmoil. Robert Rough
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.
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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South Australian energy minister Tom Koutsantonis leant on ENGIE to turn its mothballed gas plant back on. Sean Davey
Gas was at $22 a gigajoule in Adelaide yesterday, nearly four times the usual level. But a meeting of federal and state energy ministers to consider the problems in the energy markets has had to be postponed indefinitely because of the delay in determining the outcome of the election.
Average prices hit high
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.
But South Australia, which led the charge into wind and solar energy and gets two-fifths of its power from these sources, has suffered the highest prices on the mainland, increasing the pressure on the state's industrial energy users.
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A plunge on wind power is blamed in part for South Australia's surging power prices. Nicolas Walker
"Large end user customers are feeling the pain," said Brian Morris, vice-president of energy services at Schneider Electric and chairman of the Energy Users Association of Australia.
"As large customers roll off their energy contracts and need to renew those contracts they are being faced with significantly higher prices for the future."
Electricity contracts for delivery in 2017 and 2018 are priced at $91-100MWh in South Australia, compared to $50-63 in Victoria, NSW and Queensland.
Short-term prices in South Australia have hit extreme levels, exacerbated by an outage in the Heywood high voltage interconnector, the state's energy lifeline to Victoria, which is being upgraded to 600MW and won't be back in service until July 25.
South Australian NEM prices have averaged about $360MWh so far this month, Mr Morris said, compared to $80-90MWh in Victoria and NSW. The NEM seeks to integrate the east coast states with South Australia and Tasmania to allow electricity to flow across state borders via a series of interconnectors. It excludes West Australia and the Northern Territory.
'Extraordinary step'
South Australian energy minister and treasurer Tom Koutsantonis said he had taken the "extraordinary step" of asking ENGIE to switch on its mothballed Pelican Point gas-fired power station at the request of an alarmed industry sector.
"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."
The station was switched on on Thursday afternoon and was set to generate as much as 150 MW later that night and be capable of operating at full capacity of 247Mw after that depending on demand.
Energy experts say South Australia's heavy reliance on wind energy is compounding its problems in two ways, first by forcing the remaining baseload generators to earn more revenue in shorter periods of time when the wind isn't blowing, and secondly by forcing baseload coal and gas generators out of the market altogether.
Power problems continue
But renewable energy advocates say the state's plunge on wind power is not to blame, and the problems are a continuation of South Australia's history of paying above average prices because of its isolation and concentration of its generation capacity.
ENGIE spokesman Trevor Rowe said the company was not being paid by the government on top of the wholesale price it receives for the power in the National Electricity Market (NEM).
One of Pelican Point's two gas turbines hasn't operated since April and the other was switched off this year. Mr Rowe said South Australia's high NEM prices had not previously enticed Pelican Point back into the market because of tight gas supply and high gas prices.
"Its a complicated story. It links tightness in the gas market and high gas prices and we had not made a decision to go back into the market for those reasons. When we were approached by the South Australian government, we found a way that we were able to do it," Mr Rowe said.
Mr Koutsantonis said energy users were warned of the interconnector outage and could have hedged. But one large user said the market was "just seeing the start" of the problems in South Australia. "What the government is doing is a good start but it's not going to address the problem in the long term," he said.
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