AEMO calls for more funding as management costs soar

Wind farm at sunset with transmission towers in the background (aemo report)
Image: Lucy Nicholson/Reuters

With renewables soaring nationwide, the Australian Energy Market Operator (AEMO) is pushing for a 66 per cent funding increase to oversee one of its key jurisdictions, ABC News reports.

The agency wants $156.2 million over three years to 2025 to operate the main electricity market in Western Australia.

Related article: AEMO releases report on future energy scenarios

In a submission to WA’s economic watchdog, AEMO said it needed the extra funds to help cope with the increasing complexity and volatility in the market as more and more renewable energy assets came online.

“While the growing level of variable renewable generation is helping the [WA system] transition towards clean, low-cost generation, it can pose operational challenges,” it said in its submission.

The Australian Energy Regulator (AER) also noted AEMO was spending tens of millions of dollars on contingency measures to ensure the NEM did not run short of power at vulnerable times.

Tthe regulator said AEMO was having to intervene in the normal functioning of the NEM by calling on more expensive power plants to help provide grid stability.

These interventions had come “at significant cost to consumers”, the AER said, with the AEMO shelling out $50 million in 2018 and 2019 to compensate affected generators. Despite efforts to control these costs, they were higher still in 2020 at $66 million.

AEMO said the growing challenges of keeping the lights on were highlighted in its latest snapshot of the market, which showed record volatility in the three months to December 31.

Minimum demand for electricity from the grid fell to new lows in SA, NSW and Victoria as cooler weather subdued demand and growing amounts of rooftop solar pushed out fossil fuel-fired generators.

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Across the NEM, the average output of renewable energy also increased from 31.6 per cent to 34.9 per cent, with maximum output reaching as high as 61.8 per cent for a short time on November 15.

The Australian Energy Council, which represents big electricity providers, said AEMO’s spending plan reflected the “dramatic shift in the energy mix and significant government reforms”, and that it was critical to ensure AEMO’s spending was transparent to ensure it was kept to a minimum.

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