The South Australian Government has asked multinational electrical utility company ENGIE to beginning running their previously mothballed Pelican Point Power Station, following a combination of factors that have hindered supply.
The state government was forced to intervene in the energy market at the request of businesses after planned outage of the Heywood Interconnector to Victoria, coupled with higher than expected gas prices and severe weather conditions contributed to large-scale price volatility in the energy spot market.
The capacity of the Heywood interconnector is currently constrained as ElectraNet works to increase the capacity of the existing 275kV connection and allow greater flows between South Australia and Victoria.
The works on the interconnector have been planned for more than a year and announced to the market in November 2015. Companies had the option of hedging against the spot market while the upgrade was undertaken to avoid price fluctuations.
South Australia MInister for Energy, Tom Koutsantonis, said the current price volatility is an example of the failure of the national energy market.
“A confluence of remarkable events has led to incredible volatility in the spot market over recent days which has resulted in higher electricity prices and put pressure on South Australian businesses, some of whom have raised their concerns with me,” Mr Koutsantonis said.
The Government asked ENGIE, the owner of Pelican Point Power Station, to run the plant under market conditions until works are completed on the connector, providing 239 MW of additional supply into the energy market.
“Due to the privatisation of the state’s electricity assets there is very little the state can do to ameliorate the price volatility,” Mr Koutsantonis said.
“However, the Government is doing what it can to try and protect these businesses and stabilise energy prices during this period.”
Mr Koutsantonis said ENGIE’s agreement to run one unit of its Pelican Point power plant will increase base-load supply and help to deliver a more secure and reliable power system for the duration of the Heywood interconnector outage.
