Australian watchdog sues 4 wind farm operators over 2016 blackout

© Reuters. Australian watchdog sues 4 wind farm operators over 2016 blackout

MELBOURNE (Reuters) - Australia's energy regulator said on Wednesday it is seeking compensation in court action against four wind farm operators, including AGL Energy (AX:AGL) and France's Neoen SA (PA:NEOEN), over a state-wide blackout in South Australia in 2016.

Each of the companies faces claims that several of their power generating units contravened regulations over a period of several months, not just on Sept. 28, 2016, the day of the blackout. South Australia is the country's most wind power-reliant state. (https://reut.rs/2M3y0Mn)

As well as seeking the introduction of new compliance programs and legal costs, the regulator is targeting penalties of up to A$100,000 ($67,220) per contravention. If the court rules in the regulator's favor, that could mean potential overall charges of at least tens of millions of dollars.

The Australian Energy Regulator (AER) alleges that AGL, Neoen, New Zealand's Tilt Renewables Ltd (NZ:TLT) and Chinese state-owned Pacific Hydro failed to ensure their plants met requirements to be able to ride through system disturbances.

The state lost all power on Sept. 28 after two tornadoes damaged transmission lines, disrupting voltages, which triggered protection features at nine wind farms that suddenly reduced their output.

The sharp drop in power from the wind farms overloaded demand for power on a transmission line from a neighboring state, which then tripped that link off, cutting the state off from back-up electricity supply.

"These alleged failures contributed to the black system event and meant that AEMO (the Australian Energy Market Operator) was not fully informed when responding to system wide failure in South Australia in September 2016," AER Chair Paula Conboy said in a statement.

AGL on Wednesday called the allegations "highly technical" and said it believed it had complied with its legal obligations but would consider its position.

In a statement to the New Zealand stock exchange, Tilt said it believed it had "acted in good faith" and would continue to try to resolve the matter with the regulator.

Neoen and Pacific Hydro were not immediately available to comment.

The blackout in South Australia - where wind accounts for more than 35% of power generating capacity - led to widespread concern about the rapid uptake of intermittent renewable energy weakening the country's reliable power supply.

"The AER has brought these proceedings to send a strong signal to all energy businesses about the importance of compliance with performance standards to promote system security and reliability," the regulator's Conboy said.

($1 = 1.4877 Australian dollars)