Aussie households and businesses have been urged to “remain vigilant” as the country’s energy system hits more turbulence.
Australia’s energy market operator will lift its historic market suspension, but the minister in charge has warned that challenges remain.
Last week the Australian Energy Market Operator seized control of the market in an unprecedented step to stabilize power supplies and thwart the threat of blackouts.
The chaos was brought on by the price caps which AEMO had imposed on generators, leading generators to withdraw capacity from the east coast market.
Speaking to reporters, chief executive Daniel Westerman confirmed the staged return to normal market operations from 4am on Thursday.
“Then we will allow the market to set the price again. The second step will happen 24 hours after that, when we will be able to formally lift the market suspension,” he told reporters in Sydney.
“We know that a well functioning national electricity market is key to ensuring the lowest cost energy to Australian homes and businesses.
“This step-by-step approach minimizes the risk of seeing the dysfunctional behavior that led to the market suspension last week.”
Last week’s intervention marked the first time in the operator’s history that it took control of the national market.
An investigation between AEMO and the Australian Energy Regulator will take place to ensure it does not happen again, Mr Westerman said.
Energy Minister Chris Bowen backed the market operator, telling reporters it had the full support of the federal government.
“What the chief executive has outlined today is, I think, a prudent and carefully managed approach to return to more normal market conditions,” he said.
“Risks remain in the system and I know that AEMO remains vigilant about what needs to be cared for in the coming days.”
The longer term plan for the energy market, Mr Westerman said, was to delink Australia from international price shocks and aging infrastructure.
“It points to the long term answer, which is a transition to firmed renewables and transmission,” he said.
“Australia’s got an enormous job to do in connecting new generation sources, particularly solar and wind … Our priority will be to continue to connect the new generation sources at pace.”
Mr Bowen agreed, insisting the dysfunction reinforced the need to implement the government’s capability mechanism – which could see coal and gas generators paid for reliable supply.
“We need to make faster progress on the transformation and we need the capacity mechanism to help us do that,” he said.
“To provide that safety net underneath, as we engage in this significant transformation to a more renewable economy, a more renewable energy system with more storage.”