The Australian Energy Market Operator (AEMO) has announced it will move to lift the suspension of the National Energy Market (NEM) as market conditions improve.
Seven days since it took the decision to suspend the NEM, AEMO has seen a clear improvement in market conditions.
This includes 4,000MW of generation returning from outages.
In making the announcement, AEMO CEO, Daniel Westerman, said the operator would take a staged approach to lifting the market suspension.
“The first step is that at 4am 23 June, we will allow the market to set the price again,” Mr Westerman said.
“The second step will be to completely lift the suspension.”
Mr Westerman said that after the first step was taken, AEMO would expect to see:
- The dispatch engine, that is the system used to schedule generation into the grid, operating with very few constraints
- A low volume of directions from AEMO to generators – instead they would respond to market signals
- A reduction in forecast shortfalls of energy, or low reserves, as generators respond to those market signals
Mr Westerman said that AEMO would monitor these conditions for a further period of at least 24 hours before making a decision to lift the market suspension.
“By removing these conditions, we hope that the market will return to a normal bidding and dispatch situation – allowing the market to operate without major AEMO interventions and manual management of generation,” Mr Westerman said.
Mr Westerman praised collaboration across federal, state and territory governments, alongside the industry, saying the actions taken had allowed the market operator to make this move.
“Last week when AEMO suspended the market, we put the security of the grid, and kept the lights on above everything else,” Mr Westerman said.
“We asked generators to bid their plant back into the system – and that is happening more – giving us greater visibility of generation in real time.”
Conditions remain dynamic and AEMO will continue to monitor reserve conditions across all regions.
Building generator confidence
The peak body for power generators and retailers, the Australian Energy Council (AEC), has welcomed AEMO’s decision.
AEC Chief Executive, Sarah McNamara said the staged return of the market announced by AEMO is a positive step forward.
“It will give generators confidence to bid into the market under more normal bidding and dispatch conditions,” Ms McNamara said.
“Importantly, the market will restart without the administered price cap in place, which as the AEC noted last week, proved counterproductive by interfering with the market’s ability to ration limited fuel supply.
“Our members will continue to work closely with AEMO, as they always do.
“While fuel supplies remain tight, almost 4,000MW of generation capacity has come back online from outages, thanks to the hard work of people at power plants.
“Whilst no power system operates without risk, the community should be reassured the worst of the supply issues that affected the market in recent weeks are behind us for now.”
