Australia, World’s Biggest Coal Exporter, Battles Power Crunch; Urges People To Consume Less, Suspends Electricity Market, Considers Blocking Exports

Snapshot
  • Australia’s heavily populated eastern state has been facing a prolonged power crunch as around 25 per cent of the market’s 23,000 megawatts (MW) of coal-fired capacity has been offline due to technical issues at major domestic coal mines, cold winter driving up demand for heating, obsolete state of many coal-fired power stations. Almost 65% of Australian energy is generated from coal.

The state government of New South Wales announced today (Jun 16) that it will be invoking emergency powers to control the state’s coal supplies as a precautionary measure to “keep the lights on and the system going”.

The emergency powers will provide the state energy ministry with authority to declare the supply and distribution of coal as an essential service and block coal exports if the power situation worsens. The coal producers can also be ordered to increase supply or facilitate the delivery of coal to electricity generators.

Australia’s heavily populated eastern state has been facing a prolonged power crunch as around 25 per cent of the market’s 23,000 megawatts (MW) of coal-fired capacity has been offline due to technical issues at major domestic coal mines, cold winter driving up demand for heating, and obsolete state of many coal-fired power stations.

Almost 65% of Australian energy is generated from coal. Renewables accounted for around a third of Australia’s electricity generation last year and are forecasted to be close to 70% by the end of the decade.

Australia’s climate change and energy minister, Chris Bowen, on Thursday (Jun 16), urged people living in New South Wales to conserve electricity for two hours every evening. He said that the New South Wales power grid is likely to come “under significant pressure” during the evening hours but that he was “confident” blackouts could be avoided.

“We are confident we can avoid blackouts,” he said at a televised media conference in Canberra. “If you have a choice about when to run certain items, don’t run them from 6 to 8 (p.m.).” he added.

Australia is also the world’s biggest exporter of coal. The move by European Union to impose a ban on Russian coal imports with effect from Aug 10 could put pressure on the wholesale price of coal as it may incentivise exports and make it expensive for local power producers.

On Jun 15, Australian Energy Market Operator (AEMO), the country’s energy markets regulator, announced that it was suspending the spot market in all regions of the National Electricity Market (NEM) under the National Electricity Rules (NER).

AEMO said that it was forced to take the step because it was becoming impossible to continue operating the spot market while ensuring a secure and reliable supply of electricity for consumers.

“In the current situation suspending the market is the best way to ensure a reliable supply of electricity for Australian homes and businesses,” AEMO CEO Daniel Westerman said.