Origin fires up capacity in response to Victorian power outage

Origin Energy boss Frank Calabria says the energy giant’s only power station in Victoria, a gas-fired peaking plant, is running at full capacity to help stabilise the grid as thousands of the company’s customers remain without power.

More than 75,000 homes and businesses were still without power on Thursday after a violent storm ripped through the state on Tuesday, upending transmission lines and plunging energy users into one of the state’s longest ongoing power blackouts.

Origin Energy chief executive Frank Calabria.
Origin Energy chief executive Frank Calabria.Credit: Bloomberg

“We have a lot of customers in that market that are without power, and we hope they get it restored as soon as possible. Everyone will work in the industry for that to occur,” Calabria said. “We are doing whatever we can to help.”

Origin’s gas-fired plant in Mortlake, in Victoria’s west, is operating at full capacity under direction from the Australian Energy Market Operator (AEMO). The company cut power it usually supplies to customers from the Stockyard Hill Wind Farm, west of Ballarat, because of two major bushfires in the area.

Calabria said volatility in the grid was increasing, which affected both energy prices and reliability, but the company’s Eraring plant in NSW was unlikely to suffer the same fate as AGL’s Loy Yang A plant if struck by a similar weather event because it was in a more stable part of the grid.

Loy Yang A’s generators were tripped by the severe weather that downed major transmission lines, and cut power for hundreds of thousands of people across Victoria.

Origin is still in discussions with the NSW government about extending Eraring’s scheduled closure date beyond August 2025.

“We haven’t changed our notice of closure,” Origin’s head of energy supply and operations, Greg Jarvis, said. “We’re in multiple negotiations with the NSW government and that continues. I can’t give you any timeframe on that.”

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Calabria said coal-fired power stations were becoming “more and more difficult” to run. “You spend a lot of time maintaining these plants and when you get no return in the middle of the day, that’s difficult. If you underinvest, you can have outages which could cost you a lot of money,” he said.

Origin’s gas peakers are filling gaps in demand and Calabria said the company was moving fast to build backup batteries. “That will increase the flexibility of the portfolio,” he said.

Origin is in talks with the NSW government about keeping the Eraring power station open longer.
Origin is in talks with the NSW government about keeping the Eraring power station open longer.Credit: Bloomberg

Origin reported a $995 million profit for the half year to December on improved earnings from all its businesses. It is forecasting higher full-year earnings, between to $1.6 billion and $1.8 billion, off the back of improved electricity margins and a growing customer base.

Like rival power firm AGL, Origin experienced a sharp turnaround in its fortunes as the lag effect of November 2022’s peak in wholesale electricity prices fattened its bottom line, although wholesale prices are now softening.

Calabria said he expected electricity prices to moderate, which would ease pressure on households struggling with the cost-of-living crisis. “Our expectation is that you will see lower wholesale electricity prices next year and that would feed into lower regulated tariffs,” he said.

Company profits are likely to boosted by repricing in wholesale gas supply contracts.

UBS analyst Tom Allen said Origin’s half-year result beat expectations in all divisions except the company’s European-based Octopus Energy. Origin’s shares rose 2.6 per cent to $8.80 in trading on Thursday, and it will pay a fully franked interim dividend of 27.5¢ per share.

“Investors will focus on the potential uses of cash going forward, noting that Origin has committed to release a new distribution policy,” Allen said.

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Source: Thanks smh.com