The Australian Energy Regulator (AER) has today published two reports into high spot prices exceeding $5,000 per megawatt hour (MWh) in the National Electricity Market during May 2021.
The events occurred on 17 and 18 May 2021 in the wholesale electricity market in New South Wales (NSW), Victoria and South Australia (SA) and on 21 May 2021 in the wholesale electricity market in NSW.
The reports reveal 85% of the capacity 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. Rebidding of capacity from low to high prices did not contribute to prices above $5,000/MWh in any of the relevant trading intervals. More in-depth analysis of these events can be found in the AER’s reports.
We have prepared one report to cover the events on 17 and 18 May 2021. On 17 May 2021 the spot price in NSW, Victoria and SA exceeded $5,000/MWh for the 6pm trading interval and on 18 May 2021, the spot price in NSW, Victoria and SA exceeded $5,000/MWh for the 6pm and 6.30pm trading intervals. The high prices were expected because wind forecasts were low and a number of baseload generation units were out on planned maintenance.
The AER’s analysis found the following factors contributed to the high prices on 17 and 18 May:
- Across the three regions, planned and unplanned generator outages meant almost 4,000 MW of baseload generation was unavailable.
- Two thirds of this capacity was planned, which is normal behaviour as maintenance is undertaken during the lower demand periods of spring and autumn.
- One third was unplanned due to various technical plant issues.
- Calm conditions meant wind generation across the three regions was very low at between 320 MW to 430 MW out of more than 6,500 MW of installed wind capacity.
- Demand was high, driven by cooler weather increasing heating requirements and rooftop solar tapering off as the sun went down.
- Upgrades on the Queensland-New South Wales Interconnector (QNI) limited flows from Queensland into NSW to around 700 MW out of the 1,000 MW nominal limit.
We have prepared one report to cover the events on 21 May. On 21 May 2021 the spot price in NSW exceeded $5,000/MWh for the 5 pm and 5.30 pm trading intervals. These prices were forecast to be above $5,000/MWh from midday, because of reduced supply, increased demand, and similar circumstances to the price events earlier in the week.
The AER’s analysis found the following factors contributed to the high prices on 21 May:
- Planned and unplanned generator outages meant almost 2,800 MW of baseload generation was unavailable.
- About 1,800 MW of this capacity was on planned outage.
- This included limited capacity from AGL’s Liddell unit 3 which experienced technical issues as it returned to service from an unplanned outage.
- Calm conditions meant wind generation was very low at around 230 MW out of the 2,000 MW of installed wind capacity in NSW.
- There was limited supply from Victoria and Queensland.
- Line outages in the Canberra area prevented generation from Victoria or southern NSW getting to load centres around Sydney.
- Upgrades to the QNI limited flows from Queensland to 630 MW out of the 1,000 MW nominal limit.
- Demand was high, driven by cooler weather increasing heating requirements and rooftop solar tapering off as the sun went down.
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.