AEMO moves to lift energy market suspension

The Australian Energy Market Operator (AEMO) has commenced a staged approach to lift the suspension of the National Energy Market (NEM).

23 June 2022 

Seven days since the market operator took the decision to suspend the NEM, the AEMO said it has seen a clear improvement in market conditions with 4,000 MW of generation returning from outages.

The AEMO signalled there was sufficient supply to get through since Wednesday but confirmed it was still directing generators to pump power into the network. 

In making the announcement, AEMO CEO Daniel Westerman said the operator would take a staged approach to lifting the market suspension.

The AEMO resumed trading in a two-stage process and started with the market setting prices again from 4am AEST on Thursday. The second step would be to completely lift the suspension after monitoring conditions for 24 hours.

“We will absolutely be working very closely with the regulator and Australian Energy Markets Commission on a series of actions to prevent this from happening again,” Mr Westerman said.

“It’s not a place where the market operator wants to be in suspending the market. So we’re looking at obviously undertaking a detailed investigation, to understand comprehensively the lessons learned and put in place actions so it doesn’t happen again.”

Mr Westerman said that after the first step was taken, AEMO would expect to see the dispatch engine, that is the system used to schedule generation into the grid, operating with very few constraints.

There would be less volume of directions from AEMO to generators – instead they would respond to market signals along with a reduction in forecast shortfalls of energy, or low reserves, as generators respond to those market signals.

The AEMO would monitor these conditions for a further period of at least 24 hours before making a decision to lift the market suspension.

"By removing these conditions, we hope that the market will return to a normal bidding and dispatch situation – allowing the market to operate without major AEMO interventions and manual management of generation," Mr Westerman said.

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Mr Westerman praised collaboration across federal, state and territory governments, alongside the industry, saying the actions taken had allowed the market operator to make this move.

"Last week when AEMO suspended the market, we put the security of the grid and keeping the lights on above everything else," he said.

"We asked generators to bid their plant back into the system – and that is happening more – giving us greater visibility of generation in real time.

“Conditions remain dynamic and AEMO will continue to monitor reserve conditions across all regions.”

Minister for Energy and Climate Change Chris Bowen said he supported the restart to energy trading as “a prudent and carefully managed approach to return to more normal market conditions.

Risks remain in the system and I know that AEMO remains very vigilant about what needs to be cared for in the coming days but the process laid out by AEMO,” he said.

“AEMO will monitor the situation very carefully, after generators are allowed to bid back into the system at 4am and then they’ll make further staged judgments about what is prudent. 

“If there are any large, unexpected outages that's going to put enormous pressure back on the system, but we have had a lot of generation come back on in recent days, we have seen the market, such as it is, as it's been suspended, but we've seen circumstances return to more normal sorts of activity.

“I've been very clear that there remain risks in the system. But we're aware of that. We're vigilant to that and we're on the job. And everybody's working very hard to minimise that risk. But of course, as I've said before, we've got a bumpy winter, because we don't have enough electricity generation in the system, not enough renewables, not enough storage of renewables and not enough transmission.

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