The Australian Energy Regulator (AER) is required to monitor and report on events and causes that result in the spot price of energy exceeding $5 000 per megawatt hour.
On 18 November 2016, New South Wales prices exceeded this threshold meaning the wholesale cost of electricity was much higher than normal, reaching $11 701/MWh for the 3.30 pm trading interval.
The AER’s analysis determined that several factors contributed to this price, including:
- generator rebidding in NSW that limited transfers from Victoria across the Victorian-New South Wales (VIC-NSW) electricity interconnector; and
- the subsequent need to dispatch high priced local electricity generation in NSW to meet demand.
The high prices were prolonged because the generators reduced the speed with which electricity output could be changed, extending the time the interconnector capacity was reduced.
Alternative cheaper generation from Queensland could not be sourced as both of the interconnectors connecting NSW to Queensland were already importing electricity at full capacity.
To read more in depth analysis of this event you can download the full report.