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Vic power unit outages leave market unfazed

Sudden outages at two coal power plants in Victoria over the weekend did little to rattle the electricity market in the normally critical mid-summer period in a sign of how rapidly the state’s power grid is transforming.

The unit shutdowns at the Yallourn and Loy Yang A sites in the Latrobe Valley came amid record low demand for power for January that caused wholesale prices to sink into negative territory for several hours on Sunday.

EnergyAustralia reported a unit tripped at Yallourn, requiring repairs that should be completed later this week. AGL Energy meanwhile saw an unexpected outage at one unit at Loy Yang A, according to electricity market watcher Dylan McConnell at Melbourne’s Climate & Energy College, while a second unit at Loy Yang was brought down more gradually.

Scheduled demand on Victoria’s grid – which excludes rooftop solar – dipped below 2900 megawatts at about 1.30 pm on Sunday, Mr McConnell said, easily breaking January’s previous record low.

That was reflected in wholesale prices, with negative prices prevailing for about six hours on Sunday in Victoria, where temperatures have been subdued by the La Niña weather system. The situation contrasts with more typical summer worries about spiking prices and potential shortages when heatwaves inflate demand.

The soft power prices contrast with a 10-month high reached by the Australian carbon spot price on Monday, Reputex noted, pointing to growing speculation that the Morrison government will commit to a more ambitious net zero emissions target.

The carbon price reached $16.63 per tonne, up from a 12-month low of $15.80 last May-June.

Reputex said the prospect of Australia setting a more ambitious long-term emissions target could lead to a more bullish outlook for the local carbon offset price, driven by momentum for the United States to return to the Paris Agreement, the increased likelihood of stronger climate action by the Biden administration following the Senate runoff elections in Georgia, and market optimism ahead of the postponed intergovernmental climate conference, to be held in Glasgow in November.

The sub-zero wholesale power prices in Victoria that lasted from before midday to about 5pm also caused generators to turn down baseload coal units that weren’t affected by technical problems in a bid to lift profitability.

“Demand was very low over the weekend – and at times negative – so we took the opportunity to proactively take another unit offline for minor repair works,” an EnergyAustralia spokeswoman said, adding that unit would also be back online later this week.

The record low for demand for grid power comes as Victorians are continuing to install rooftop solar panels at a rate of knots, with one in every five homes now sporting panels.

That number is set to rise further with the state’s latest incentives and rebates to get more households to switch to renewable power, Victoria’s Minister for Energy and Solar Homes Lily D’Ambrosio said.

In South Australia and Western Australia, record use of rooftop solar has fuelled worries about demand for centralised power dropping so low that it destabilises the grid.

Industry sources said low demand didn’t pose a threat to system security in Victoria this weekend, although the situation was being monitored within the Australia Energy Market Operator. Demand in Victoria was even lower on Christmas Day.

The Australian Energy Market Operator said last May that by 2025 more than 50 per cent of the power demand in Victoria, NSW and Queensland could at times be supplied by rooftop solar panels, and as much as 85 per cent in South Australia. It has emphasised the importance of interconnectors between states and installing battery storage systems to help manage the grid as renewable energy generation grows.

Victoria now has 510,000 small-scale solar PV systems, generating almost a third of residential electricity demand. Of those, more than 15,000 households also have a battery.

Households with solar can save up to $890 a year and a further $640 with a battery. Last November was the biggest month for the uptake of solar battery rebates, at 429 applications.

Source: Financial Review