The Australian Energy Regulator (AER) today published a report into energy prices exceeding $5,000 per megawatt hour (MWh), in the National Electricity Market (NEM).
On 30 December 2021, the 30-minute wholesale price for electricity in South Australia reached $8,456/MWh and $5,279/MWh for the 7:30 pm and 8 pm 30-minute periods.
On 31 December at 7 pm the 30-minute price reached $6,368/MWh in South Australia.
The main drivers to both evenings included high demand due to warm temperatures and customers shifting their demand from rooftop solar to the grid as the sun set. There was limited access to low priced generation as it was extremely calm on both evenings and imports were limited across Murraylink.
High prices were not forecast. Rebidding of capacity from low to high prices did not contribute to the high price.
The AER is required to publish a report whenever the electricity 30-minute price exceeds $5,000/MWh and when prices for a market ancillary service over a period significantly exceed the relevant 30-minute price for energy and exceed $5,000/MW for numerous 30-minute periods.
A high price may occur due to several factors, 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.
The AER has recently submitted a rule change request to the AEMC proposing amendments to the AER’s reporting obligations in relation to high price events in the NEM. While it is important that the AER continue to analyse and report on significant wholesale price outcomes in the NEM, elements of the current requirements are overly prescriptive and no longer fit for purpose.