HOW AUSTRALIA CAN KEEP ITS LIGHTS ON
* Australian Energy Market Operator says an extra 1000MW of power needs to be kept on stand-by to cover peak demand spikes in the 2017-18 summer.
* It is using its existing reliability and emergency reserve trader mechanism (RERT) to tender now for this capacity.
* Emergency reserves could come from battery storage, people's back-up diesel generators, consumers agreeing to cut energy use when asked, or mothballed gas power plants that say it's not economic for them to run all the time (there are none of these at the moment).
* Coal-fired power isn't useful for this emergency use because it can't start up or increase capacity fast enough.
* Without these reserves, South Australians and Victorians are at high risk of four-hour blackouts this summer, and NSW and Victoria at risk from 2022.
* The RERT powers run out this summer so AEMO will set up a new strategic reserves plan to meet demand spikes in the short term, expected to be in use until the summer of 2020-21.
* After then it's anticipated the government's as-yet-unformed energy policy will have encouraged enough new generation to cover shortfalls.
* Cost of paying for stand-by generation likely to be covered by consumers - likened to insurance against blackouts.
* 1000MW of permanent generation capacity needs to come into the system by 2022 when the ageing Liddell coal-fired power station is slated for closure.
* AEMO prefers keeping existing power stations open longer or upgrading them over building new plants due to the tight timing.
* It recommends immediately developing a long-term approach to give incentives or price signals that encourage new investment in generation - this could be the clean energy target recommended by Chief Scientist Alan Finkel.
* Australia is not alone - AEMO says every major power grid around the world is grappling with similar challenges.
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