The Australian Energy Regulator (AER) today published two reports into energy prices exceeding $5,000 per megawatt hour (MWh), in the National Electricity Market (NEM).
Queensland
On 31 January 2022, the wholesale price for electricity in Queensland was between $6,798/MWh and $12,179/MWh for the 30-minute periods between 6 pm and 7 pm. On 1 February the 30-minute price was between $13,429/MWh and $14,682/MWh for the 30-minute periods between 5.30 pm and 7 pm.
These high-price events were caused by high demand, due to warm temperatures and reduced availability of low priced generation due to outages and network limits. High prices were forecast.
On 1 February, AEMO did not expect to have enough spare capacity available, so it initiated the reliability and emergency reserve trader (RERT) mechanism, which increased the amount of spare capacity in the region.
Victoria and South Australia
On 31 January 2022 the wholesale price of electricity reached $14,149/MWh in Victoria and $14,239/MWh in South Australia for the 6 pm 30-minute period.
The main drivers included high demand due to warm temperatures, a network constraint which forced counter-price flows from Victoria into NSW, and reduced availability due to outages and low wind. Price forecasts fluctuated between $340/MWh and the cap of $15,000/MWh.
Background
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.