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 3 June 2021.
On that day, the spot price in Queensland was forecast to exceed $5,000/MWh throughout the afternoon and evening, however it only occurred for the 6.30 pm and 7 pm trading intervals.
The main drivers of these high spot prices include:
- Planned and unplanned outages to baseload generators which saw over 3,400 MW of low-priced capacity unavailable to the market.
- Planned line outages for the upgrade of the Queensland to New South Wales interconnector, which limited Queensland’s ability to import cheaper generation from New South Wales.
- Due to the upgrades on the Queensland-New South Wales Interconnector, Queensland had to provide all Frequency Control Ancillary services locally that effectively reduced the amount of low priced capacity that was available for energy.
At least 86% 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.