Nothing like a couple of hours without electricity during a heatwave to remind you of our reliance on it. In Melbourne yesterday, the major interconnector between NSW and Victoria went down because of bushfires. This took out 2000MW of potential power imported from NSW just as demand soared above 9000MW in Victoria. Here is the graph from NEMMCO.
The green line is demand. You can see that as the outage occurred at just after 3pm yesterday, automatic load shedding began taking out much of the South of Melbourne. Immediately, those 2000MW were wiped off demand but no more. At the same time prices reached their peak of $10000 per MW (they are normally between $30 and $40) resulting in a clear bonanza for electricity generators. The motherload so to speak. And that lasted for hours; usually these spikes are good news if they last for only a few minutes. And as the only disruption was to imports from NSW, the Victorian generators did not even have to reduce output to benefit from the price spike. That is, at least $68m in potential spot market revenue.
Actually, I have no problem with that. It only signals that electricity generation might be a good business to be in and so will allow future investment to be tailored accordingly. That is how the system is supposed to work. The problem I have is on the demand side.
Like most households, I pay a regulated electricity price. If I am lucky I can get a few percent off for a year but it takes work. But many larger businesses have signed interruptible electricity contracts. That means they get a much lower price for electricity but, if there is an issue, someone rings them up and tells them to reduce their consumption.
So yesterday, what should have happened? The outage would have triggered some automatic shutoffs; and it did. Right there around 3pm. Then the ring arounds would have begun and the shutoffs would have switched away from households and to interruptible businesses. However, that did not happen. Instead, the households stayed off until 6:30pm or beyond and then came back on. By the time, other businesses had shut down for the normal day and so the system could cope. Also, other harder to start generators would have been switched on and existing ones pushed harder. The end result is that by 8pm the system could cope with 8000MW without additional restrictions. The question is: how interruptible is the interruptible supply? Did that actually happened? After all, they get a discount and we don’t.
I’ll add to this another concern. The Victorian government last night was considering putting in restrictions on household use of airconditioners. Again, a supply interruption. Now the interconnector is back up and so that won’t happen and as I write this, demand is already above 7000MW even before work starts. But if that restoration didn’t occur, why is it that households would be interrupted? Surely, as the heatwave continues, the businesses with interruptible contracts should go first. That is the gamble they have taken. Now that might be what was going to occur too but the aggregate figures do not seem to back that up as a possibility.
But spare another thought for those households who are paying a premium to get so-called Green Energy. The idea here is that they pay more so that electricity is supplied from green sources such as gas-fired generation. Well, we know that you can’t actually dictate which electrons go to which households but those folks supported local gas-fire generators (supposedly) would have been interrupted the same way as everyone else and faced the same restrictions. This is even though the sources of energy they (supposedly) supported were still working fine. One really has to wonder what Green Energy customers are really paying for.