Experts agree that a shortage of coal-fired power generation is one of the main causes for the current crisis, where power prices are soaring and there are rolling warnings of electricity blackouts
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Grattan Institute energy director Tony Wood says it is wrong to say the situation has been “caused by too much renewables or too much coal”. The electricity market usually works by power generators offering power supply for sale, based on 5-minute trading cycles, and retailers buying what is needed for their customers.
AEMO was forced to make rapid-fire interventions by using its hefty market powers to force coal plants to fire back up and prevent blackouts, triggering compensation payments to the operators that will ultimately be borne by households and businesses. “To say that it’s an unprecedented set of circumstances is probably underselling it. It’s a cliche but there are multiple factors compounding it. You’ve got the underlying commodity prices, because of international conflict. You’ve got cold weather, multiple coal plant outages, and then you’ve got that overlaid on top that a price protection mechanism.”
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