Analysis

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Is increased volatility the new norm?

This year has showcased an increased level of volatility in the National Electricity Market (NEM). To date we have seen significant fluctuations in spot prices with prices hitting both maximum price caps on several occasions and ongoing growth in periods of negative prices with generation being curtailed at times. We took a closer look at why this is happening and the impact this could have on the grid in the future.

BY Australian Energy Council Oct 03 2024

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Is there a better way to manage AEMO’s costs?

The market operator performs a vital role in managing the electricity and gas systems and markets across Australia. In WA, AEMO recovers the costs of performing its functions via fees paid by market participants, based on expenditure approved by the State’s Economic Regulation Authority. In the last few years, AEMO’s costs have sky-rocketed in WA driven in part by the amount of market reform and the challenges of budgeting projects that are not adequately defined. Here we take a look at how AEMO’s costs have escalated, proposed changes to the allowable revenue framework, and what can be done to keep a lid on costs.

BY Graham Pearson Sep 19 2024

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Offshore wind feasibility licenses have been granted – what are the proposals and who’s behind them?

The Federal Government has announced the first proposed offshore wind projects to receive a feasibility licence for development of generation in the Gippsland Offshore Wind Zone. We take a look at the proponents and projects.

BY Australian Energy Council May 02 2024

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Gas outlook highlights peaking plant role in transition

Apart from raising some alarm bells over future potential gas shortfalls, the release of the Australian Energy Market Operator’s assessment of gas needs again highlighted the important role gas generation will play in the energy transition. Gas generation is seen increasingly as a “strategic reserve for power system reliability and security” and “will be critical when it runs”. We take a look.

BY Carl Kitchen Apr 04 2024

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The Wholesale Demand Response Mechanism: Leading a horse to water

After being first recommended in 2011 by the AEMC's Power of Choice Review, and followed by a decade-long passionate debate, the Wholesale Demand Response Mechanism was finally implemented on 24 October 2021. Two years later we look back and see if it was worth all the effort.

BY Ben Skinner Sep 07 2023

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Bittersweet farewell to Liddell

Last week was another significant step along the path to a lower emissions power grid with the closure of the Liddell Power Station after 52 years of service. The length of service is quite an achievement - it’s estimated only around 1 per cent of thermal plants globally run beyond 50 years. The closure of the final unit was described as “bittersweet” while the lead up to the end of operations was heralded by commentary on perils to supply reliability and the potential for higher wholesale prices. But it wasn’t the first time it made the headlines in NSW.

BY Carl Kitchen May 04 2023

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Victoria to NSW Interconnector, a functionally impaired asset?

In recent times daytime northern flow limits on the Victoria to NSW Interconnector (VNI) have dramatically reduced. It is particularly noticeable when compared with the flows from previous years. As a result VNI’s daily constraint profile looks more like the daily generation profile of a solar farm. Constraints on VNI northward flows are resulting in significant dispatch inefficiencies and with it costs. We take a closer look.

BY Peter Brook Mar 23 2023

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Paying for primary frequency response – Finally some light at the end of a long tunnel

AEMO is designing the detailed implementation of Frequency Performance Payments (FPP) as a means to maintain the National Electricity Market’s frequency close to 50 Hertz. The market operator has performed some preliminary modelling of likely outcomes and this work provides some early comfort, that, although a voluntary market was always the industry’s first choice, a FPP compensation regime might be the next best thing. We take a look at the modelling, and how it came about.

BY Ben Skinner Mar 02 2023

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What a difference a year makes

It has been an extraordinary year in energy (some might say unprecedented). While 12 months ago the ACCC was announcing the lowest electricity prices for 8 years, now price caps on gas and black coal are expected in response to concerns about wholesale price surges and their impact on end user bills. Aside from these price challenges, we saw the NEM suspended for the first time, as well as major state-based energy plans unveiled, including revival of Victoria’s State Electricity Commission, and announcements of more early coal closures. We take a brief look back as the year draws to a close and consider what 2023 might bring.

BY Sarah McNamara Dec 08 2022

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Power Price Pressures: Here, there and everywhere

Power prices continue to be in the news. Last week an Energy and Climate Summit was told that retail electricity prices could increase by as much as 35 per cent next year. That commentary reflected the continued extreme pressure on wholesale prices in the National Electricity Market (NEM). Recent reports have now also highlighted the impacts that the energy issues are having on elements of the energy system, not just here but also in Europe.

BY Carl Kitchen Oct 20 2022

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AEMO Market Suspension Report: Anatomy of a Crisis

On 18 August AEMO published its much anticipated statutory report on the National Electricity Market (NEM) events in the fortnight between 10 and 24 June 2022. Early in the crisis it was unclear exactly what was occurring, and some misinformed commentary pre-emptively blamed generator bidding behaviour, which was then repeated by mainstream media and politicians, unfairly tarnishing the industry’s image. AEMO’s report shows that the crisis was far more complex, and, if blame can be laid anywhere, it rests in rules written two decades earlier.

BY Ben Skinner Aug 25 2022

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Will the WEM have enough capacity?

AEMO recently released its latest Wholesale Electricity Market Electricity Statement of Opportunities. The ESOO is important in setting the Reserve Capacity Requirement and but the biggest takeaway from this year's ESOO is the sharp reduction in excess capacity in the short term and a forecast capacity shortfall from 2025-26.

BY Graham Pearson Jun 30 2022

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Closure notice rules not as simple as they sound

Recently the Federal Energy Minister submitted a rule change to the AEMC to extend the notice of closure for generators to five years. Early market information is certainly beneficial, but attempting to mandate fixed dates does introduce complexities, is not readily enforceable and is potentially counter-productive. It also appears to confuse forecasts and commitments. We look at the history of such rules, along with the issues that can arise.

BY Ben Skinner Apr 14 2022

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Do generators earn adequate revenue?

Electricity markets are always evolving to address new and emerging issues. The Wholesale Electricity Market (WEM) has seen its share of reforms and changes. Together they can have a substantial impact on generators, so to better understand the implications the Australian Energy Council (AEC) engaged Marsden Jacobs Associates (MJA). MJA’s review is pertinent across Australia and here we look at the key findings and consider whether generators in the WEM receive adequate revenue to support the dramatic transition underway.

BY Graham Pearson Apr 07 2022

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Year in review: Some hits, some misses

It was another year of significant developments in the energy sector ranging from carbon emission commitments from both the Federal Government and Opposition, to the start of 5 minute settlements and Victoria's new tougher requirements for retailers.

BY Carl Kitchen Dec 09 2021

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Five-minute settlement starts

A momentous change in the National Electricity Market occurs at midnight. Energy will no longer be settled in 30-minute slices, instead each five-minute interval will be settled against its own dispatch price. Sound simple? Conceptually perhaps. But hundreds of millions of dollars were invested to make it happen and it’s affected all parts of the industry.

BY Ben Skinner & Ben Barnes Sep 30 2021

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Increases in negative prices: Is it a positive?

If there's one thing the Australian Energy Regulator’s State of the Energy Market report has reminded us, it’s that the National Electricity Market can be a wild ride at times. After the NEM achieved the lowest first quarter for wholesale prices since 2012, the last few months have seen an increase in price volatility.

BY Carl Kitchen Jul 08 2021

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Queensland blackout: Should we let the market run?

Following a fire at Callide C Power station on Tuesday 25 May, a series of events resulted in multiple generators disconnecting and 2,300MW of demand being interrupted. This was the most severe event in the NEM since SA's black system of 2016. Like all serious power system incidents, there was a complex chain of issues that will take some time to unpick.

BY Ben Skinner May 27 2021

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South Australia: Famine one day, feast the next (but one)

South Australia could borrow a slogan from another state based on recent vagaries and challenges thrown up by its energy grid. One day it experienced spot prices exceeding $5000/MWh six times between 6pm and midnight and two days later it was reporting near-record minimum demand, which required the step of curtailing rooftop solar to ensure grid stability.

BY Carl Kitchen May 20 2021

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Renewables in the NEM: Are they leading to price extremes?

With the ongoing growth of renewables in Australia there has been speculation of the overall impact this will have on an energy-only market like the NEM and in particular, its potential influence on spot prices.

BY Carl Kitchen Aug 20 2020

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