The Australian Energy Regulator (AER) has published a report into energy prices exceeding $5,000 per megawatt hour (MWh) in the National Electricity Market (NEM) and Frequency Control Ancillary Services (FCAS) markets in Victoria, Tasmania and South Australia during February 2024.
During the month, 30-minute wholesale energy prices exceeded $5,000 per MWh 11 times – 3 times in South Australia, 3 times in Tasmania and 5 times in Victoria. 30-minute prices also exceeded $5,000 per MW twice in the FCAS markets in South Australia during February 2024.
The drivers of these high price events were related to a significant storm in Victoria on 13 February that resulted in the collapse of major transmission towers:
- High temperatures lead to high demand, and in the early afternoon a severe storm in Victoria caused the main transmission lines between South Australia and Victoria to fail leading to significant network stress.
- As a result of these line outages, several units tripped and around 2,500 MW of low-priced generation was unable to make it to market.
- Almost all generation available was dispatched across Victoria and Tasmania leading to high prices in both regions.
- High demand, the loss of significant generation capacity and network constraints led to involuntary load shedding in Victoria. When load shedding occurs, the price is automatically set to the market price cap.
- Another consequence of these events was the potential loss of the Heywood interconnector which meant that South Australia needed to source FCAS locally.
- On 21 and 27 February in South Australia, the loss of the transmission towers continued to affect prices by limiting cheap imports during periods of high temperatures, high demand, and low wind generation.
- Rebidding of capacity due to plant limitations and outages contributed to some of the high price intervals.
Background
The AER is required to report into significant price outcomes in the NEM.
A high price may occur due to a variety of 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 published a Guideline for how we report into significant price outcomes.