On that day, the spot price in New South Wales was $5,177/MWh for the 9 am trading interval. The main drivers were reduced supply and high demand.
Generator outages and reduced generator availability meant over 3,000 MW of baseload generation in New South Wales was unavailable, reducing the amount of low-priced capacity available.
Due to coal or plant issues, 1,700 MW was not offered by units that were online but not fully available to the market. Additionally, Eraring power station in Lake Macquarie was undergoing planned maintenance, removing 720 MW, and a Bayswater unit in Muswellbrook had trouble returning to service and removed all 660 MW of its capacity by 8.35 am following a tube leak.
Access to low-priced capacity was also limited from Victoria and Queensland. Line outages in the Canberra area prevented generation from Victoria or southern New South Wales getting to load centres around Sydney. Upgrades to the Queensland-New South Wales interconnector (QNI) limited flows from Queensland to less than 500 MW out of the 1,000 MW nominal limit.
Actual demand in the morning peak in New South Wales was 500 MW higher than forecast four hours prior to the high price event.
The price was only forecast 10 minutes before the end of the trading interval, and there was not enough available capacity in New South Wales able to come on in time to meet an increase in demand. To meet the demand, imports were sourced from Queensland, which at the time was experiencing high prices in ancillary services. The interactions between the energy and ancillary services markets meant that for two dispatch intervals (10 minutes), the price in New South Wales was set at the cap of $15,100/MWh and the spot price for the 9 am trading interval exceeded $5,000/MWh.
At the time, 93% of capacity in New South Wales was offered below $5,000/MWh and rebidding 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.