The Australian Energy Regulator (AER) has today published a report into high spot prices exceeding $5,000 per megawatt hour (MWh) in the National Electricity Market on 10 June 2021.
On that day, the spot price in New South Wales and Queensland was forecast to exceed $5,000/MWh throughout the afternoon and evening. However, it only occurred for the 6pm and 6.30pm trading intervals in New South Wales and the 6pm trading interval in Queensland.
The main drivers were high demand and reduced supply.
Demand was high during the evening peak, driven by extremely cold weather increasing heating requirements. New South Wales hit the highest winter peak demand since 2010 at around 13,000MW.
Planned and unplanned generator outages meant almost 5,800MW of baseload generation across Queensland and New South Wales was unavailable.
About 3,300MW of this capacity was undergoing planned maintenance, as expected during the lower demand periods of spring and autumn. The remaining 1,800MW of capacity on unplanned outages was all in Queensland, most of which had been out since significant failure of the Callide C unit 4 on 25 May.
Another 700MW was unavailable due to technical issues, mostly at Liddell and Gladstone power stations.
Interactions between the energy and FCAS markets limited the effective amount of low priced capacity available during high prices.
No further imports could be sourced from Victoria, as the VIC-NSW interconnector was already operating at or close to its nominal limit.
Up to 91% of capacity in Queensland was offered below $5,000/MWh, however capacity above $5,000/MWh was still needed to meet demand during high prices.
Rebidding of capacity from low to high prices did not contribute to prices above $5,000/MWh.
The AER monitors and reports on the causes for wholesale electricity spot prices exceeding $5,000/MWh. The wholesale electricity spot price exceeding this threshold triggers the AER reporting.
There can be many reasons a high spot price occurs, including outages that adversely affect supply-demand conditions in the wholesale market. The AER’s role in monitoring wholesale energy markets and reporting on high price events helps to enhance market transparency and compliance.
Our analysis provides a foundation to detect non-compliance, market irregularities, inefficiencies and consumer harm. We draw on this work to advise stakeholders and market bodies on wholesale market issues.