As NSW suffered through its record-breaking heatwave this month, with power supplies stretched to breaking point, the head of Australia's main electricity grid faced a choice: keep the airconditioning running in Sydney, or keep the lights on in Victoria.

Tony Marxsen, chairman of the Australian Energy Market Operator (AEMO), picked up the phone to the Victorian government on the afternoon of Friday February 10 to warn that people in western Victoria might have to endure blackouts to ensure a key transmission line to NSW could keep operating at full capacity.

Underscoring the parlous state of the nation's power grid, it was a case of Ballarat and Bendigo losing electricity or maintaining supplies to the most populous state.

"Wouldn't you want to get as much as you can to the state that needs it, which is what we were doing?" said an AEMO spokesman Joe Adamo, referring to what experts believe may be the first instance of electricity "pain sharing" across state boundaries.

While Melbourne had only moderately above-average temperatures, the regional cities were much warmer, with Bendigo topping 41 degrees that day. Sydney reached 37.5 degrees, while western suburbs exceeded 44 degrees at the start of a two-day scorcher that smashed February records in NSW.

The Victorian government is understood to have been angered by the information power supplies to parts of the state might be sacrificed even as it was exporting as much electricity as it could to its northern neighbour.

Power to Victoria's regional towns was vulnerable because a so-called System Overload Control Scheme (SOCS) was activated on the main transmission line at about 4pm, AEDT, and lasted for several hours without being triggered. In the end, the system scraped through without blackouts occurring in Victoria.

The revelation of the latest strain on the nation's energy system comes after South Australia suffered power cuts earlier this month despite having available gas-fired generation capacity. Labor's Opposition Leader Bill Shorten will also renew his pitch for renewable sources of electricity to ensure Australia exploits "all our natural advantages" in a speech to be given on Thursday.

Mr Adamo defended arrangements that meant Victoria shared the pain to ensure key infrastructure wasn't damaged by the heavy loads, saying that was how the National Electricity Market was designed to work.

"If you export less to NSW, then ... you'd have to do more load-shedding [in NSW]," he said.

'Disappointed'

Lily D'Ambrosio, Victoria's Energy Minister, declined to comment on conversations between her government and AEMO. Nevertheless, she said management of the power grid needed urgent attention.

"We were disappointed in AEMO's ability to forecast and manage the heatwave," Ms D'Ambrosio said. "What occurred in fossil-fuel dependent NSW clearly shows that our network needs to be modernised."

AEMO released a "System Event Report" on the NSW heatwave on Wednesday, but excluded mention of the Victorian SOCS activation that could have prompted the local cuts.

"It's a pretty glaring omission," said Dylan McConnell, a research fellow at the Climate & Energy College at Melbourne University, adding he was not aware of any previous "pain sharing" procedure activated across state borders.

"It doesn't appear they were sacrificing Bendigo and Ballarat for Sydney as much as they preparing to sacrifice [those two cities] for Tomago Aluminium," Mr McConnell said. "NSW got through by the skin of their teeth."

Tomago, which accounts for about 12 per cent of NSW demand, was ordered by AEMO to shed 290 megawatts of load by closing one of its three smelter potlines at about 6pm, AEDT. That curtailment overlapped with an order from its power supplier AGL also in place, meaning Tomago removed 580 MW from demand for a period.

Missing gas, coal-fired power

As AEMO's own report revealed, NSW narrowly avoided blackouts during the event, with about 2000 MW of gas and coal-fired power stations unavailable at the height of demand.

Tallawarra's generators, owned by EnergyAustralia, failed because of a fault and Snowy Hydro's Colongra units were unable to start due to low gas pressure.

AGL also had reduced output with two of the four Liddell power units, each of 500 MW capacity, unavailable on the day.

The failures, coming about 6pm local time on the Friday, combined with a drop in solar and wind capacity – in line with forecasts – to overload NSW connections with Queensland and Victoria, "creating an insecure operating state".

Wholesale power prices soared to the market limit of $14,000 per MW-hour during the power squeeze, compared with an average in 2016 of less than $60.

South Australia, which draws about 40 per cent of its electricity from wind energy, had power outages two days earlier in the same heatwave, when available gas supplies failed to be tapped and wind energy dropped more than predicted, AEMO said in a separate report last week.

Special taskforce

Don Harwin, the new NSW Energy Minister, on Tuesday named Mary O'Kane, the state's chief scientist, as the chair of an energy security taskforce to examine how NSW can better prepare for extreme weather conditions.

Also on the taskforce are Brian Spalding, currently a commissioner on the Australian Energy Market Commission, and Dave Owens, a former Deputy NSW Police commissioner and emergency management expert.

NSW avoided a repeat of SA's power cuts - which took about 90,000 homes offline for about 40 minutes - in part because Tomago Aluminium could be asked to turn off its smelter potlines. 

AEMO estimates the government's call early in the day for consumers to avoid unnecessary power use and even to raise the thermostats on airconditioners to 26 degrees helped keep demand about 200 MW below forecast at the time of peak demand.

NSW also relied on 1745 MW of electricity imports from Victoria and Queensland at the height of demand, or about 12 per cent of its supplies.

Rooftop solar panels also helped save 291 MW in demand at 6pm, local time, even with the sun low in the sky, the report said.

NSW sweltered during the biggest heatwave of the summer, breaking February records for average maximum temperatures across the state for both the Friday and then the Saturday. The February 11 readings were about two degrees warmer than the highest temperatures recorded for the month prior to the heatwave, the Bureau of Meteorology said.

'Vandalism'

Mr Shorten, meanwhile, will tell a conference at Bloomberg New Energy Finance in Sydney on Thursday that Australia is "going backwards" on renewable energy, with Prime Minister Malcolm Turnbull demonising the sector.

"If the Liberals had just stuck to the old conservative nostrum of 'first, do no harm', if they'd done nothing but keep pace with the global trend – we would have added 7600 jobs [in the sector]," Mr Shorten said.

"Instead, at every turn, they have chosen vandalism over pragmatism."

He reiterated Labor's support for Australia to source half its electricity from renewable sources by 2030 – up from an existing bipartisan target of about 23 per cent for 2020 – and dismissed criticism the party had confused its message of late.

"Forget the word games – 50 per cent renewables by 2030 is Labor's target, our goal, our objective and our aspiration. Call it what you like," he said, according to speech notes provided to Fairfax Media.

An Emissions Intensity Scheme that puts a price on pollution and would encourage dirtier power stations to drop out of the market will be a main driver to that goal, Mr Shorten said.