An illustration of increasing generation oversupply in the National Electricity Market


On Wednesday 8th October I provided comment in the FinReview on “Generation wallows in Oversupply”This piece was one of a number in a special Energy & Infrastructure Special Report – clearly the electricity and gas sector is topical for a number of reasons, at present.

To illustrate the nature of the oversupply challenge, we prepared the following chart highlighting the yawning gap that’s been opening up between generation supply and scheduled electricity demand in the NEM:

Trended supply and demand balance in Australia's National Electricity Market

Of course, there are a number of ways in which this issue could be addressed.  Which path we choose to take for addressing this challenge is likely to be based on policy as much as it will be on economics. 

However those who think that such choices are going to be:
(a)  easily implemented (without, for instance, careful thinking-through of security of supply concerns) and
(b)  without cost (even if – or perhaps especially as – these costs will be socialised),
are, to my understanding, not seeing the true picture.

Perhaps we might start to see some more reasoned consideration of the RET Review.

About the Author

Paul McArdle
One of three founders of the company back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

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