Australian Energy Market Operator issues outage warnings, as electricity demand outstrips generation

Five states across Australia are facing potential power outage fears. Photo / NCA NewsWire

Fears of demand outstripping electricity production have continued across five Australian states, with a regulator chief admitting that supply is "very tight right now".

NSW could once again face the possibility of blackouts, with the demand for electricity outstripping supply.

While Tuesday's fears didn't materialise, potential power outages could see the state face another electricity crisis from 5pm on Wednesday to 3.30am on Thursday.

The Australian Energy Market Operator (AEMO) issued the warning, after forecasting similar concerns for Queensland, Victoria, Tasmania and South Australia.

At 7 am, the AEMO reported that the scheduled demand was at 10,732 megawatts, while the scheduled generation was forecasted for 9,622 megawatts in NSW. In Tasmania, the demand was scheduled for 1454 megawatts, with the generation sittings at 1147 megawatts.

Meanwhile, generation was outstripping demand in Queensland, South Australia and Victoria.

In Victoria, the Yallourn power station – which provides roughly 20 per cent of the state's electricity – has also lost half its capacity.

Energy Australia confirmed the major coal plant was operating on a reduced output, with the generators scheduled to return later in the week.

Appearing on Sunrise, Chair of the Australian Energy Regulator Clare Savage warned that supply was "very tight right now".

"We do know that there is more generation available that is being given to the market

However, she also asked people to not stress.

It was confirmed that Victoria's Yallourn power station had lost half its capacity on Tuesday. Photo / NCA NewsWire

"I don't want to hear people turning off heating in the middle of winter," she said.

"It's always a great idea to conserve energy because it is a great way to reduce your bills but it's important to look after your health and stay comfortable in your home."

Speaking to Ben Fordham, the Executive Director of Alinta Energy Daniel McClelland said that these types of warnings "aren't unusual and added that discussions were being had by generators and regulators.

"I don't think they should be too worried. The market has a good history of responding," he said.

"They've got plans in place to avoid the worst."

McClelland did however hint higher power prices could continue into the next two years, describing the government as "scrambling while the horse has bolted".

"The Australian markets aren't immune to the international power squeeze. It's been a bumpy ride if you go back 18 months ago," he said.

Suburbs in Sydney's Northern Beaches and north of the city were affected by power outages, including parts of Beacon Hill, Frenchs Forest, Narraweena, Cromer and Dee Why. However, Ausgrid reported that the electricity had returned by the morning.

In response to the blackout fears, Climate Change and Energy Minister, Chris Bowen has asked households to switch off unnecessary and superfluous energy usage in order to conserve energy. However, Bowen believed that load shedding and blackouts were not a "likely outcome" at this point.

"So swimming pool filters, swimming pool heaters and outside lighting … There is a general request that the market is tight and if they can be turned off then that would be ­useful," he said.

While several states were plunged into an electricity crisis, the AEMO believed generators were withholding 2000 megawatts of power, which had not been bid into the market in NSW and Queensland.

Climate Change and Energy Minister Chris Bowen advised households to conserve power. Photo / NCA NewsWire

This comes as the market operator imposed a $300-per-megawatt-hour price cap to halt surging wholesale power prices in both Queensland and NSW.

Previously Savage, warned that "market participants must not, by any act or omission, whether intentionally or recklessly, cause or significantly contribute to the circumstances causing a direction to be issued, without reasonable cause.

"This behaviour may be motivated by generators seeking to avoid the administered pricing compensation process in favour of the AEMO directions compensation process," she said.