In proceedings brought by the Australian Energy Regulator (AER), Callide Power Trading admitted that on 25 May 2021 it failed to ensure the Callide C4 coal-fired generating unit met or exceeded its performance standards as required under the NER. It also admitted that it failed to plan and design its facilities and ensure they were operated to comply with its performance standards, also in breach of the NER.
With a maximum penalty of $10 million, the $9 million penalty is the highest ever imposed for a failure to comply with performance standards under the NER.
The catastrophic failure and destruction of Callide C4 had widespread impacts. The disconnection caused major disruption to energy supply and required AEMO to activate emergency reliability measures.
The plant damage resulted in Callide C4 being out of service for nearly two years. It remained offline until 30 August 2024 due to unrelated incidents.
AER Chair Clare Savage said the Court’s decision reflected the seriousness of the breach by Callide Power Trading.
“In the immediate aftermath of the event, the energy supply for almost half a million customers was disrupted and the spot price for electricity in Queensland and New South Wales significantly increased.
“This significant penalty reinforces the importance of generators and Registered Participants [ie, participants in the Australian energy market] who are responsible for generators, complying with performance standards to ensure the security and safety of the power system.
“Those responsible for generators must have appropriate systems, processes and protocols in place to ensure they and their operators can comply with their regulatory obligations.”
Justice Derrington said: “… the penalty of $9 000 000…should be understood by others in the industry as reflecting the seriousness with which the Court regards the two contraventions admitted by Callide Power Trading.”
In addition to ordering Callide Power Trading to pay the penalty, the court ordered it to pay $150 000 towards the AER’s legal costs.
The Callide C4 event occurred on the afternoon of 25 May 2021, during a planned procedure to replace the battery charger for the Callide C4 generating unit.
The event caused the catastrophic failure and destruction of the Callide C4 generating unit (commissioned in 2001), and was followed by significant, long-term and wide-ranging impacts on the National Energy Market and on energy consumers in Queensland and northern New South Wales.
There were no injuries or fatalities but some 3045 MW of generation was lost, and 2300 MW of customer load was disconnected from the power system resulting in widespread blackouts to households and businesses across Queensland.
After conducting a thorough investigation, on 9 February 2024 the AER instituted proceedings in the Federal Court against Callide Power Trading Pty Ltd for failing to comply with its performance standards for the Callide C power station.
The penalty decision was handed down on 4 February 2025.
Root causes – the Brady Haywood report
A report by engineering consultancy Brady Haywood, Technical and organisational investigation of the Callide unit C4 incident, published in July 2024, investigated the root causes of the catastrophic event. Some of its key findings are summarised below.
The report notes that the Callide 4 steam turbine rotor shaft was held in position by bearings situated at eight locations along its length, as illustrated in the diagram on page 25. The bearings consist of cylindrical sleeves that are pumped with pressurised oil to provide a thin film of lubrication oil between the rotor shaft and bearings. This allows the rotor to spin freely without metal-on-metal contact.
Inside the generator, the rotor is cooled by pressurised hydrogen gas. To prevent hydrogen escaping, a seal is created by pumping pressurised oil into the small gap between the rotor shaft and generator casing at each end of the generator.
Unit C4 relies on two electrical systems: an AC system and a DC system. These provide electrical supply to the unit.
The AC system supplies most of the equipment required for the unit to operate. This includes equipment that provides lubrication oil to the bearings, equipment that provides cooling for the unit, and equipment that opens and closes valves.
The DC system supplies the unit’s protection, control, and monitoring systems. It also supplies back-up equipment, such as the emergency lubrication oil pumps. The protection, control, and monitoring systems detect and respond to faults in the unit. For example, if AC supply is lost, they can disconnect the unit from the grid and shut it down safely.
The unit C4 DC system is supplied by a battery charger and a battery. The battery charger is the primary source of supply to the DC system, with the battery providing redundancy should the battery charger cease to operate. The battery charger receives its supply from the unit C4 AC system.
In February 2021, a project was underway to replace the battery charger in unit C4. To facilitate this replacement, the unit C4 battery charger and battery were disconnected from the unit C4 DC system. With these supplies disconnected, the unit received its DC supply from an alternate source, referred to in the Brady Haywood report as the ‘station DC supply.’
On 25 May 2021, the unit C4 battery charger had been replaced and was ready to be brought into service. This involved connecting the battery charger and battery to the unit C4 DC system using a pre-planned, formal sequence of steps called a ‘switching sequence.’ This switching sequence was conducted with unit C4 online (ie, connected to the Queensland power grid) and exporting electricity.
Prior to the switching sequence commencing:
- All DC supply to unit C4 was being provided by the station DC supply (the alternate supply).
- The unit C4 battery charger and battery were yet to be connected to the unit.
During the switching sequence, the following took place, according to the Brady Haywood account:
- The replacement battery charger was first connected to the unit C4 DC system.
- Then, in accordance with the switching sequence, the station DC supply (the alternate supply) was disconnected from unit C4. At this step in the switching sequence, the unit C4 battery had not yet been connected to the unit. This was due to occur in the next step of the switching sequence.
- With no battery connected, the disconnection of the station DC supply resulted in the unit C4 battery charger being the sole source of DC supply to unit C4.
- As the sole source of supply, the battery charger was required to respond instantly to maintain the voltage in the unit C4 DC system. The battery charger, however, did not respond instantly, which caused the unit C4 DC system voltage to collapse from ~243 V to ~120 V, says the Brady Haywood report.
- The voltage collapse in the DC system caused one of the unit’s protection systems, known as ‘arc flap protection’, to respond as if a fault had occurred on the unit’s AC system, the Brady Haywood report notes. Despite no such fault actually occurring, the arc flap protection activated and disconnected the AC supply to Unit C4.
- With no AC supply, the unit C4 battery charger shut down and, with no battery to provide redundancy, this resulted in a complete loss of DC supply to unit C4 (from ~120 V to ~0 V), according to the report.
The loss of AC and DC supplies to unit C4 occurred in less than two seconds, leaving the unit without the two electrical systems it needed to operate properly, disconnect from the grid, or shut down safely.
There is a switch on the unit C4 DC system, known as the ‘automatic changeover switch’. If DC supply is lost, this switch should operate automatically and restore supply to part of the unit. The unit C4 automatic changeover switch had, however, been damaged in a previous incident, says the Brady Haywood report. and it was inoperable in automatic mode on 25 May 2021. This meant DC supply to Unit C4 was not restored.
There is an emergency diesel generator in Callide C power station. If AC supply is lost, this generator should start automatically and restore supply to part of the unit. On 25 May 2021, the emergency diesel generator started, but it could not restore AC supply to unit C4. This was because of the loss of DC supply to the unit. DC supply is needed to power the switches required to reconfigure the AC system so that it can receive supply from the emergency diesel generator. With no DC supply to the unit, the AC system could not be reconfigured, and AC supply to unit C4 was not restored.
As there was no AC supply, the turbine’s steam valves closed, resulting in no steam entering the turbine to drive the rotor. As there was no DC supply, the unit’s protection systems could not operate, resulting in unit C4 remaining connected to the grid.
With no steam driving the rotor, but with unit C4 still connected to the grid, the unit went from exporting power to the grid, to importing power from the grid. This imported power resulted in ‘motoring’, the Brady Haywood report observes, ie the rotor continued to spin. So, despite the loss of both the AC and DC systems, the unit C4 turbine rotor continued to spin at about 3000 rpm.
In the Callide control room, the unit C4 display screens went black, the Brady Haywood report notes, because of the loss of both AC and DC supply, and the operators in the control room were without access to the data they needed to assess unit C4’s status and take informed action.
According to the Brady Haywood report, the key consequences of the loss of AC and DC supply were as follows:
- No seal oil being pumped to the generator hydrogen seals, which resulted in hydrogen escaping, likely causing hydrogen fires. This loss of hydrogen, in combination with the loss of other cooling systems, caused the generator to overheat.
- No lubrication oil being pumped to the bearings, which resulted in the thin film of oil between the rotor shaft and the bearings being lost. The rotor shaft and bearings began grinding metal-on-metal, which created friction and heat. This led to the bearings melting and the rotor shaft softening and deforming. The deformations caused the rotor to wobble out of its finely tuned and balanced alignment.
- No protection, control, and monitoring systems being available for the unit to operate properly, disconnect from the grid, or shut down safely, due to the loss of DC supply.
The motoring of unit C4 continued for approximately 34 minutes and, with the loss of key systems, led to catastrophic failure.
The wobbling of the rotor likely caused part of the rotor to snag on the metal turbine casing, observes the Brady Haywood report. With the rotor still spinning at about 3000 rpm, this sudden impact transferred tremendous force to the turbine rotor shaft, causing it to to tear apart at nine locations.
A piece of rotor shaft weighing more than two tonnes was thrown five metres across the floor of the turbine hall, the report notes, and the barring gear, weighing 300 kg, was thrown 20 metres into the air, punching through the turbine hall roof. The force from the impact also ejected remnants of coupling covers, bearings and rotor shaft sections from the turbine generator, resulting in widespread damage to the surrounding environment, including the turbine hall’s wall and roof, with the catastrophic failure of the turbine generator referred to as the ‘turbine missile event’.
After the turbine missile event, the generator remained connected to the grid for approximately 40 seconds. During this time, an electrical fault developed in the generator, causing it to arc and draw high current from the grid – more than twice the unit’s rated export power. The protection systems in the Queensland power grid responded by disconnecting the Calvale substation (the C4 grid connection point) from the grid.
The disconnection of the substation also disconnected unit C4, concluding the incident, which occurred between 1:33 pm and 2:07 pm on 25 May 2021. By 2:07 pm, the turbine generator, along with other equipment, had been destroyed, and the incident had destabilised the Queensland power grid, the Brady Haywood report concludes.
