Observation 5/22 from GenInsights21 – the rise of ‘Just in Time’

We released GenInsights on 15th December 2021 – containing 22 ‘Key Observations’ inside of Part 2 of the report .. and incidentally had a good discussion about it this afternoon with the EUAA Electricity Committee:

1)  complete with a number of questions/prompts that we might be able to expand on here on WattClarity in the coming weeks.

2)  we’ve already started doing this, with the publication this evening of ‘Trended bidding from BESS discharge (NEM-wide) … highlighting APC and Market Suspension’.

In that article we talk about energy (not capacity) constraints as being the main trigger for this ‘2022 Energy Crisis’ and included reference to Observation 5 of 22 within Part 2 of GenInsights where we speak about ‘The Rise of Just in Time’

As noted there, we thought it useful (given the current crisis) to share the whole of Observation 5 in its entirety (with links added, for ease of reference) …



Through our recent collective experience of the COVID pandemic, questions are being asked about the risks of ‘Just-in-Time’ supply chains for delivery of a range of commodities we use in our everyday life.

Everyone will remember the great toilet paper shortage of 2020 and 2021!

More seriously though, there’s not enough awareness of the implications of our move to a much more ‘Just-in-Time’ electricity supply chain.

In the past, power stations operated with stockpiles and bunkers of fuel, and gas pipelines with line-pack and onsite storage of diesel or other liquid fuel for dual-fuelled peaking generators:

  • A black coal-fired power station might typically have had 2 weeks’ worth of energy stored on stockpiles onsite, and several hours’ worth of energy stored in unit slot bunkers.
  • A brown coal-fired power station holds many hours’ worth of energy in coal bunkers onsite. Whilst they typically don’t have larger stockpiles of coal onsite, they had the advantage of the coal mine located on the same location as the station.
  • Gas turbines would typically hold many hours’ worth of typical usage in line-pack and if worse came to worse, backup diesel fuel is typically stored onsite at many gas-fired power stations in the NEM.
  • Most hydro stations have storage reservoirs to store water ready for use when the consumer demand requires it.

Strangely enough, we know of no grid-scale power system around the world that use 100% run-of-river arrangements for multi-GW scale grids.

Have we really thought through the implications, and done serious modelling of the risks that will need to be managed, of moving to an environment approaching 100% instantaneous renewables (which we cover in Appendix 26) and beyond?

How much storage are we actually going to need to keep risk at palatable levels on a similar scale with the amount of energy stored (and not just the ‘sunny skies’ scenarios that seems to be the limit of what most are thinking about and modelling at present)?

Perhaps it’s worth recalling several examples in Australia, and internationally, when fuel supply issues have already caused severe stresses at times in our electricity grid and market:



Brief synopsis of the event


February 2021

Though it was half a world away in February 2021, readers will have some recollection of the calamity that befell energy users in Texas in February 2021.

(a) These arose out of several weather-related impacts on ALL fuel types.

(b) One of the biggest contributors being the singular reliance of many gas-fired generators on what amounted to ‘just in time’ gas supplies (and with no dual fuel capability, or back-up energy stored onsite for when a gas supply disruption hit multiple plant as a single source of failure).

Millennium Drought,

2007, 2008

In the NEM we experience our own shock (that very few people really saw coming) in the Millennium Drought of 2007 and 2008, that:

(a) severely impeded the ability of hydro generators across the NEM to operate with very low rainfall proceeding a high generation (‘REC year’) profile; and

(b) even impacted on the ability of several thermal generators to operate in QLD, NSW and VIC, by virtue of restrictions on cooling water.

Tasmanian Drought,


In perhaps a case of ‘history repeats’, in 2016 the Tasmanian region experienced a similar challenge (to the point where emergency diesel generators were required to be installed across the state) when hydro storages were lowered at the end of the Carbon Tax era, with and expected replenishment inflow not arriving coinciding with a failure of the Basslink interconnector.

Hazelwood Closure,


One of the main reasons the sudden* closure of Hazelwood in 2017 caused such a significant energy shock and shortfall to the market (it typically generated 8-10TWh annually) was because:

(a) black coal-fired stations that picked up the slack, delivered most of the initial energy (and priced that scarcity accordingly)

(b) then, as a result of lower coal stockpiles onsite, were limited for a long period afterwards.

* Remember it was sudden because it was given 6 months’ notice by the Victorian Worksafe Authority to remediate Plant Improvement Notices, which it was not able (or willing) to do.



In June 2021, the Yallourn Power Station was threatened when flooding threatened the neighbouring mine and caused several units to come offline:

(a) This situation exacerbated what was already a very volatile period in the market following the Callide 4 incident.

(b) It also led to a special focus being added to the ESOO 2021 release in August and Summer 2020-21 readiness plan in November, to model a sensitivity case for a Yallourn outage over summer 2021-22

‘Energy Crisis 2022’

prior to, and Q2 2022

… not included in GenInsights21, which was published six months earlier, but we can clearly add in here now the current ‘2022 Energy Crisis


These are just some examples where energy limitations have already impacted on price outcomes and security/reliability concerns.

Much has been made by others (e.g. here and here) of the very limited amount of energy that will be stored and available to the Kurri Kurri peaking GT when it is operational. These concerns are arguably for good reason!

Are we in the process, through this energy transition, of increasing this risk further by driving more towards ‘Just in Time’?

These questions are the type of questions that the industry should be asking – but it should be doing this on an industry-wide perspective.

Appendix 10 covers the key dynamics and metrics of the most popular storage technology at present, Battery Energy Storage Systems (BESS).

Q1) We urgently need to develop a ‘real world’ perspective of how much storage will actually need to be retained, simply for insurance purposes (see Appendix 27 as an example), and then working backwards, to ensure we don’t put the system into a long term position from which it is difficult, if not impossible, to recover.

Two related questions that follow:

Q2) How should the development of these storage systems (both fast response and deep storage) be incentivised?

Q3) Given the increasing uncertainty about when and how it might be used (see Appendix 16 and Appendix 27 for some analysis of extremes), how should it be operated?

The risks associated with mis-forecasting storage requirements could well become catastrophic in future!


Key take-aways Energy storage is the key to power systems being able to withstand shocks, hits and issues

Yet we understand very little of how these projects will operate in a market otherwise dominated by ‘Anytime/Anywhere Energy’.



We envisage we’ll be referring back to ‘Just in Time’ in articles in the weeks, months and years ahead.


EOFY Offer for GenInsights21 & GSD2021

For those who are unaware, until COB next Friday 24th June 2022 we’re offering both GenInsights21 (and the related GSD2021)  in this bundled offer for our End-of-Financial-Year.



About the Author

Paul McArdle
One of three founders of Global-Roam back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

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