Australia to lift electricity market suspension as prices ease

Australia's energy market operator says it will lift its suspension of the country's main wholesale electricity market as its power crisis eases.

The restrictions will be temporarily lifted on Thursday before a final decision is made.

In an unprecedented move last week it suspended trading on the platform following a surge in prices.

Officials also urged people in the state of New South Wales to conserve power over concerns about shortages.

The state - which has a population of around 8 million - includes the country's biggest city Sydney.

In a statement on Wednesday, the Australian Energy Market Operator (Aemo) said it had "seen a clear improvement in market conditions" and that it would resume trading from 04:00 in Sydney on Thursday (19:00 BST Wednesday).

It added that it would monitor the market for at least 24 hours before making a decision to formally lift the suspension.

"We have seen nearly 4,000 megawatts of generation return to service since this time last week, and that means the risk of any shortfall has reduced markedly," Aemo chief executive Daniel Westerman said in a televised media conference.

Australia is one of the world's biggest exporters of coal and liquefied natural gas but it has been struggling with a power crisis since last month.

Three quarters of its electricity is still generated using coal, and it has long been accused of not doing enough to cut its emissions by investing in renewables.

In recent weeks, the country has felt the impact of disruptions to coal supplies, outages at several coal-fired power plants and soaring global energy prices.

Meanwhile, the demand for energy has jumped amid a cold snap and as Australia's economy opens up after Covid-19 restrictions were eased.

All of this helped drive up electricity prices on the wholesale market to above the A$300 (£170; $208) per megawatt hour price cap set by Aemo.

However, that cap was below the cost of production for several generators, who decided to withhold capacity.

Last Wednesday, Aemo took the unprecedented step of suspending the market and said it would set prices directly and compensate generators for the shortfall.

It also asked consumers in New South Wales to "temporarily reduce their energy usage".

At the time Mr Westerman said Aemo had "put the security of the grid, and keeping the lights on above everything else".

"We asked generators to bid their plant back into the system - and that is happening more - giving us greater visibility of generation in real time," he added.

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