South Australian manufacturer InterCast and Forge forced to turn off lights and stand down staff after energy market ‘failure’

A South Australian manufacturing business reliant on wholesale electricity has labeled the national electricity market a “failure,” after standing down 170 employees due to unaffordable operating costs.

InterCast and Forge managing director Brett Lawrence said he was forced to shut down operations at his iron foundry in Adelaide’s northern suburbs on Wednesday, following the Australian Energy Market Operator’s (AEMO) decision to suspend the spot market.

Mr Lawrence said soaring wholesale electricity prices had been a “nightmare” for the iron foundry, which accounts for about 1 per cent of South Australia’s total electricity consumption per day when fully operational.

The company does not have a retail contract for electricity, so is reliant on the wholesale spot price, which can vary every five minutes.

It manages to keep its profit operations by monitoring the spot market, in order to know when it’s a cost-effective time to run machinery.

Intercast and Forge can shut down its machinery within two seconds when wholesale electricity prices surge.(ABC News)

“We put in some software controls where we enter a price. When the price peaks above that we automatically turn off our furnaces and other equipment,” Mr Lawrence said.

He said AEMO’s suspension of that market makes it impossible to run his business.

“The nature of the announcement from AEMO is that we don’t know what the cost of [wholesale] electricity will be,” Mr Lawrence said.

At $15,000, we would go out of business within a couple of days.

$10 million electricity bill forecast

Mr Lawrence said the foundry’s annual power bill usually varied between $5 million and $7 million, but expected this year’s cost would be almost double that.

“This year, we’re forecasting an electricity bill of more than $10 million,” he said.

“For a business like ours, we cannot expect that customers will continue buying at that increase.

Already this month, the company has been unable to operate due to skyrocketing electricity prices, with 90 staff members agreeing to work on a Sunday when demand was lower.

Mr Lawrence said he would await AEMO’s daily review of the suspension before advising staff on how to proceed.

“At this stage, we have asked our employees to wait until about midday tomorrow before we advise them whether they come in on Sunday, or if we revert to a Monday roster,” he said.

A worker at Intercast and Forge
The company has stood down 170 direct employees while it awaits news from AEMO.(ABC News: Tony Hill)

‘Failed leadership at state and federal level’

Mr Lawrence has blamed the chaos gripping Australia’s energy market on a “failure in leadership”.

“The key reason that AEMO can’t have a market is because the generators aren’t able or willing to supply the market at a certain price,” he said.

He did not blame any particular government but said that “inaction” at a state and federal level over the past two decades had resulted in a system beholden to the whims of electricity generators.

SA Premier Peter Malinauskas blamed “policy malaise” over the course of the federal coalition’s nine-year reign.

“We are witnessing mass market failure when it comes to the national energy market,” he said.

“I think that’s a reflection of years of neglect and a lack of thoughtful policy at a federal level. Hopefully, we see an end of policy malaise.”

Mr Malinauskas argued South Australia was in a stronger position than the eastern states due to its higher uptake of renewable energy and said he would use Friday’s national cabinet meeting to spruik his government’s hydrogen agenda.

“I got elected on a platform of thinking about the long term… that’s where we believe hydrogen plays an essential role in the national energy market, and there are a number of issues I’ll be discussing with [federal energy] minister Chris Bowen in that respect.”

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