For only the 5th time in 11 years of NEM history (and the 3rd time for South Australia) four consecutive days of price spikes have forced the Cumulative Price to the Threshold, and AEMO has imposed price caps to prevent retailers from going bust.
high regional demand
Some quick notes about another price spike today in the South Australian region of Australia’s National Electricity Market
Summer 2008-09 is now well behind us, and there are a number of official reviews underway that will report back at some stage. Even so, we’ve been continuing to ponder…
We saw a massive new peak for NEM-Wide demand set on 29th January 2009, which surprised many (including us).
We return to that data and, by comparing with the previous 10 summers, see whether it should have been entirely unexpected.
We noted yesterday (Wednesday 10th June) that NEM-wide demand climbed past 32,000MW for the first time this winter.
The following evening saw demand climb to similar levels (a peak of 32,054MW at 18:20 – so 35MW higher than the previous night). However the situation on Thursday night was different in two key ways…
On Wednesday 10th June 2009, temperatures plunged across the NEM for the first time this winter, providing a long-awaited dump of snow to start the season, and driving electricity demand high.
Given that the holidays are now over (for most of us) and we’re returning back to “normal” life, we thought it would be a good time to provide a brief overview of what’s happened in terms of NEM-Wide demand, to date.
NSW experienced a record summer demand on Thursday 15th January, driven by high temperatures across the state. The extreme weather experienced in NSW followed the extreme weather that swept across South Australia and Victoria only two days beforehand.
Just as had been forecast, Tuesday 13th January 2009 saw hot, dry weather roll in across South Australia, and then into Victoria. The high temperatures caused demand to climb, but not to the level at which NEMMCO had forecast demand to climb over the summer period. As a result we saw the price in SA jump to a level near VOLL at 13:40, and remain there until about 18:00 (i.e. more than 4 hours).
High temperatures in Queensland drive demand up on New Year’s Eve.
It appears that we spoke too soon when we mentioned on the 22nd July that winter 2008 had been relatively uneventful.
Just over 24 hours from making these comments, we saw prices jump sky-high in the mainland regions, and go the other way (to the negative price cap) in Tasmania.
Our Managing Director spoke at the “Australian Energy & Utility Summit 08” in Sydney on Tuesday 22nd July 2008, touching on issues including the extremes of price volatility that were experienced over winter 2007.
Our Managing Director spoke at the “Australian Energy & Utility Summit 08” in
Sydney on Tuesday 22nd July 2008, touching on a number of issues including the nature of peak demand forecasts (for winter in the NSW region) over the coming 10 years
With demand soaring, and interconnectors constrained, generators in South Australia and Victoria took what opportunity they had to force the price high. So successful were the South Australian generators that the Cumulative Price Threshold was reached in South Australia and, under NEM Rules, an Administered Price Cap was applied for a period of time.
In March 2008 (after summer had officially ended) South Australians were forced to endure a record 15 straight days of temperatures climbing above 35ºC. Victorians also experienced extreme heat for…
In Queensland we experienced one of the mildest summers I can remember. As a result of this, demand levels were subdued for most of summer. However, for a couple of days in late February, summer finally arrived, and struck with a vengeance.
There was a temperature-driven spike in demand in South Australia on Friday 8th December 2006.
However, demand also spiked on other days in the week, and on those occasions did not lead to the price spikes seen on the Friday.
For several days in early December, temperatures reaching 40 degrees in Queensland and New South Wales cause airconditioning load (and hence total demand) to soar in both regions.
The high demands resulted in very high prices being experienced in both QLD and NSW (and also the SNOWY region). Both VIC and SA were insulated from the high prices because (at least in part) of the fact that transfers over the SNOVIC interconnector were constrained to minimise negative inter-regional surplus
There was a temperature-driven spike in demand in NSW on Tuesday 21st November 2006.
These sweltering temperatures combined with bushfires to cause localised blackouts in the Sydney city area, as reported in the Sydney Morning Herald in the article “Power jitters as heat bites”.
From the start of the NEM through until 2001, the NEM was typified by a pricing dichotomy with sustained rock-bottom pricing in NSW, Snowy and Victoria and high and volatile pricing in the extremities (Queensland and South Australia).
In 2001, the QNI interconnection and many generation projects were developed. This led to the convergence of prices between all regions, and the disappearance of price volatility – circumstances that were a real threat to generator profitability.
In response, generators adopted an approach that came to be known as “the economic withholding of capacity” to engineer volatility into the market throughout winter 2002 – and hence higher prices as a result., and generator behaviour.