MELBOURNE, Aug 22 (Reuters) - Australia faces a higher riskof blackouts this summer because of generation outages in thestate of Victoria, and rising costs to avert shortages, just asthe country is trying to cut power bills, the market operatorwarned on Thursday.
During the Southern Hemisphere summer that runs fromDecember through February, the Australia Energy Market Operator(AEMO) is concerned that the unplanned outages of 750 megawatts(MW) of generation capacity at a major coal-fired power stationand gas-fired plant in Victoria may not be fixed by mid-Decemberas planned.
"In Victoria, if extended into the peak summer period, theunplanned outages of two major power stations, Loy Yang A2...and Mortlake 2...pose a significant risk of insufficient supplythat could lead to material involuntary load shedding," the AEMOsaid in its annual electricity outlook report.
The AEMO forecasts a 30% chance that the Loy Yang unitoutage will extend into the summer and a 60% chance that theMortlake plant will take longer than expected.
That could result in the equivalent of up to 1.3 millionhouseholds going without power for four hours during an extremeheatwave, it said.
AEMO is working on emergency measures with state governmentsand industry to line up between 125 MW and 560 MW of extrasupply, including paying industrial users to cut powerconsumption at peak demand times.
"However,...we are finding this type of reactive action isimposing higher costs on consumers and risks to reliabilitywhich are not sustainable over the longer term," AEMO ManagingDirector Audrey Zibelman said in a statement.
She called for new markets to be established that would puta price on maintaining a reliable and secure system.
"At present, AEMO does not have the tools or mechanisms toenable cost effective access to sufficient resources for allhours of the year, so we are forced to use more emergencyactions that impose unnecessary risk and costs on consumers,"she said.
Looming in 2023 is the closure of AGL Energy'sLiddell coal-fired power plant, which AEMO said could result inoutages in Australia's most populous state, New South Wales.
The start-up of Snowy 2.0, a 2,000-MW pumped-hydro projectunder construction, which AEMO assumes will be fully running byMarch 2025, should boost power supply at peak times but willrequire new transmission capacity.
"Beyond 2020, AEMO forecasts only slight improvements inreliability for peak summer periods until new transmission anddispatchable supply and demand resources become available," AEMOsaid in the report.
(Reporting by Sonali Paul; editing by Christian Schmollinger)