How Western Australia’s energy crisis may affect your business electricity, and what you can do about it
The turmoil in the Western Australian electricity industry has been headline news recently and, we have been warned of coal and gas shortages potentially resulting in power outages and the need to import coal to meet demand this summer. For business owners, this will certainly lead to increased electricity prices and a possible disruption of services.
Electricity retailers source electricity from three major sources; bilateral contracts direct with generators, the Balancing Market (BM) and the Short-Term Energy Market (STEM). Coal fuel generators provide a cheap baseload electricity and Griffin Coal and Premier Coal supply the coal to the coal fuel generators under contract. Unfortunately, both companies have been in breach of their agreements and have supplied significantly less coal than their obligations. This has had a dramatic effect on wholesale electricity prices. The situation was expected to be resolved in October 2022 but, this did not eventuate. Griffin Coal has a liquidator appointed and Premier Coal is now expected to resume full supply in January 2023.
The effect on businesses in WA will be greater for some and less for others depending on factors such as, the location of the business and their power drawer and consumption at highly volatile times-of-day when the electricity grid is struggling to meet demand.
Planned vs Unplanned outages (SWIS)
The screenshot below indicates the significant jump in outages and the forecasted outages for the remainder of the year in the South West Interconnected System. Normally, Western Power advise residents and businesses of a planned power outage allowing time to prepare. Red indicated forced (unplanned) outages which is unusually high and could potentially affect your business.
Source: AEMO WA Data Dashboard
Electricity prices in Western Australia (SWIS)
The following tables and graphs depict the increased wholesale costs of electricity resulting from coal shortages and causing significant increases in electricity prices that affect business owners in WA.
Source: graphs produced from data published by AEMO WA
The graphs above indicate BM and STEM electricity prices from August 2021 to October 2022 showing a significant increase in prices from July and August this year, particularly in some off-peak periods. This trend has continued into December. Combined with inflation, business owners throughout WA can expect higher electricity prices until the coal and gas shortage is resolved.
How to minimise the negative effects to your business
- Prepare for power outages – diesel back up generation could save your business this summer. Whether you plan to hire, generators might be like toilet paper in pandemic, hard to find! So make sure you have preplanned access to a generator.
- Install Solar battery storage – you will have to act quickly for this summer but adding battery storage could help the pain of unplanned outages this hot season and in future.
- Try to reduce consumption between 5pm and 8pm – if we all reduce consumption and load during these hours, it could help prevent unplanned outages.
- Act on the Amanda Dispatch advice – as both a community service and to reduce your electricity prices.
- Ask your energy provider for flexible pricing and terms – stepped pricing and short term contracts might help avoid higher electricity prices for the whole duration of your contract.
Amanda Energy have energy experts dedicated to help your business. Contact Amanda for specific strategies to help minimise the effects of WA’s energy crisis.