Key Points
- Australia's energy regulator said it will begin a staged approach to gradually remove the suspension of the National Electricity Market on Thursday
- It says the transition to renewables is key to avoiding future energy price shocks and shortages
Australia's energy market regulator said it will gradually end its intervention in the east coast market, while flagging the need to transition to renewables.
The Australian Energy Market Operator (AEMO) will start its staged approach to remove the suspension of the National Electricity Market from 4am on Thursday citing a "clear improvement" in conditions since a week ago.
Improvements included 4000MW of generation returning to the grid after outages.
"The first step is that at 4am tomorrow, we will allow the market to set the price again," AEMO chief executive Daniel Westerman told reporters on Wednesday.
AEMO expects the system used to schedule generation into the grid will be operating without failure, with a low volume of directions to generators and a reduction in forecast shortfalls of energy as electricity suppliers respond to market signals.
The market operator's second step will be to completely lift the suspension after monitoring conditions for at least 24 hours.
The organisation met with industry on Tuesday outlining what needed to occur to resume normal operation in the national electricity market following the suspension on on 15 June.
"We have seen nearly 4000MW of generation return to service since this time last week, that means the risk of any shortfall has reduced markedly," Mr Westerman said.
"We know many generators are working hard and closely with governments to improve the confidence of their fuel supply, to ensure that they are able to operate at their desired level of output."
Energy Minister Chris Bowen said the actions had been significant and necessary.
"The Australian people can have confidence in ... the market operator, (which) works closely with state and territory and the federal government to ensure that consumers' best interests are protected and that our energy system remains reliable, despite the very considerable challenges that have been faced in recent weeks," he said.
He reiterated the energy market would require constant management.
"The issues that have led to this have been multi-faceted ... we need more transmission, more storage and more generation of electricity," Mr Bowen said.
"Risks remain in the system and I know AEMO remains vigilant about what needs to be cared for in the coming days."
Renewables key to long-term future
Mr Westerman said Australia's recent energy supply issues were "caused by a multitude of factors" including "ageing plants which breaks down and has more maintenance issues is an issue. The war in Ukraine and the impact of global commodity prices is an issue".
"It points to the long-term answer which is a transition to firmed renewables and transmission. That is the long-term answer to delink us from international price shocks, as well as ageing infrastructure," he said.
"Clearly, our policy of introducing more renewables into the system will reduce power prices. That was the case before the election and it remains the case now. It makes our agenda so important, more important now than ever before," Mr Bowen said.
Liberal deputy leader Sussan Ley earlier said the Morrison government had plans in place to make the transition to cleaner energy as smooth as possible.
"At the heart of this problem is not understanding that a transition takes time and a transition uses gas," she told Sky News.
"We did plan for the transition to renewables, we just didn't plan it at a rate that pushed up power prices.
"It's Labor that talks up the acceleration to renewables, which of course takes confidence out of the fossil fuels market. Coal-fired power stations heard those message from Labor."
The ACCC has been given additional powers by the federal government to monitor energy pricing.
