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 25 May 2021.
On that day, the spot price in Queensland exceeded $5,000/MWh five times during the 4.30pm to 6.30pm trading intervals, and in NSW for the 5.30pm trading interval.
The main driver of these high spot prices was a reduction in or access to low-priced capacity.
At around 2pm, a catastrophic failure of Callide C unit 4 at the Callide Power Station in central Queensland resulted in the state’s Callide B, Callide C, Stanwell and Gladstone Power Stations either going offline or having their output severely reduced.
This effectively removed around 2,000MW of capacity priced below $5,000/MWh at the time the high spot prices occurred.
Multiple significant transmission lines around Callide tripped, and the loss of generation led AEMO to invoke system strength constraints, backing off solar and wind generation which usually offers in capacity at negative prices. This mainly affected the 4.30pm and 5pm trading intervals.
Around 2,300MW in Queensland and 2,700MW in NSW of baseload generation were already unavailable, mainly due to planned outages.
Planned line outages in NSW for the upgrade of the Queensland to NSW interconnector (QNI) limited Queensland’s ability to import cheaper generation from NSW. Planned line outages around Canberra and South Morang in Victoria also limited NSW’s ability to import cheaper generation from Victoria.
Rebidding of capacity from low to high prices did not significantly contribute to prices above $5,000/MWh, except for one dispatch interval during the 4.30pm trading interval in Queensland.
The AER’s report reveals around 85% of the capacity across Queensland and NSW that was made available on the day was priced below $5,000/MWh, however some of the remaining 15% of capacity that was priced above $5,000/MWh was necessary to meet demand. More in-depth analysis of these events can be found in the report.
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.