high regional demand


Summer 2008-09 to date

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.


Record summer demand in NSW yesterday!

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.


A hot day in SA yesterday, and prices soared!

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).




Volatility in the market over winter 2007

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.


NSW winter peak demand forecasts

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


Our review of the heat wave in South Australia

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.





7th December 2005 – high demand in Queensland and NSW

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



Winter 2002 – Generator Market Power

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.


26th January 2006 – high demand and price in Victoria and SA

There was a high level in demand in Victoria on Thursday 26th January 2006.

This was especially remarkable, considering that it was an Australia Day public holiday – when commercial (though not industrial or residential) demand could be expected to be somewhat lower than would otherwise be the case.

Coupled with this level of demand was a significant spike in price that lasted several hours.



24th February 2006 – price spikes in Victoria

Demand in Victoria peaked again, bringing with it high prices in Victoria and (to a lesser extent) South Australia.

Indeed, the demand experienced in Victoria (on Friday 24th February) exceeded the previous high level of 8,552MW for summer, set in January 2006.

Our analysis looked at generator behaviour on the occasions of these price spikes.


Weekly summary of events in Summer 2005-2006

Summer 2005-06 saw Australians sweltering in temperatures 40 degrees and above.

In the National Electricity Market, this led to new peaks in demand and (given the tight supply/demand balance) delivered high (and volatile) spot market pricing.

Here we have compiled a weekly summary of events in the NEM over summer 2005-06.


30th December 2005 – huge NEM-wide demand on a holiday!

In a week which is traditionally very subdued in the market, the NEM sweltered in temperatures in excess of 40 degrees and an exceptional NEM-wide demand (about 30,000MW) was recorded.

What made this demand peak more remarkable was that this occurred on a day when, traditionally, a large amount of commercial and industrial load would have been offline for the Christmas & New Year holiday.