The Australian Energy Regulator (AER) said that rebidding by electricity generators contributed to six events where pricing breached $5,000 per MWh, but said this was mostly due to technical reasons and not generators gaming the system.
The AER investigated a total of six instances between May and July where the 30-minute price interval rose over $5,000 per MWh.
The high-price events occurred on:
- 4 May in South Australia
- 24, 25 and 30 May in New South Wales and Queensland
- 12 June in Queensland
- 28 June in South Australia
The investigation found that on most occasions, the rebids were for technical reasons, such as units failing to start and plant issues.
However, on other occasions, these rebids were for commercial reasons such as lower forecast prices or managing a constraint.
The AER said the weather is having a greater influence on the market as it transitions to renewable sources of generation.
The market is increasingly competitive during the middle of the day when renewables output is high.
However, particularly since the Liddell Power Station closure, supply and demand conditions are generally tighter during periods of high demand and low renewable output, particularly when this occurs at the same time as high levels of coal outages.
The AER said that it will continue to monitor rebidding trends because participants in the National Energy Market (NEM) can take advantage of tight market conditions by rebidding to withdraw capacity or by shifting capacity to exacerbate high prices.
Between April and June 2023, there were a total of 16 events; 6 in Queensland, 5 in New South Wales (NSW), and 5 in South Australia where prices exceeded $5,000 per megawatt-hour (MWh).
This is in contrast to the 42 high-price events during the same period the previous year, where 30-minute prices exceeded $5,000 per MWh 15 times in Queensland alone.
Why does the AER investigate 30-minute price spikes?
The AER investigated as stipulated by the National Electricity Rules to disclose and report substantial price outcomes on the National Energy Market (NEM). The established guidelines commit the AER to report whenever the 30-minute price surpasses $5,000 per MWh.
Although 30-minute prices seldom breach the $5,000/MWh threshold, the existence of a market price cap exceeding $15,000/MWh means that prices can occasionally surpass this reporting criterion.
The report must consider available capacity, network availability, and bidding and rebidding behaviour with respect to the relevant market.
The AER may also consider broader and ongoing market trends that may be contributing to significant price outcomes.
The AER is also tasked to look into any events and behaviours that may be detrimental to effective competition, efficient market operation, or any other matter that it considers relevant.
4 May, South Australia
The wholesale price of electricity exceeded $5,000 per MWh for four 30-minute periods on the morning of 4 May 2023 in South Australia.
A combination of factors drove the high prices:
• Cool morning temperatures of around 9°C drove high demand
• Low output from wind and solar generation resulted in limited amounts of low-priced capacity available
• Network limitations, which impacted the interconnectors, meant that South Australia had limited access to cheaper generation from Victoria
• Rebidding of capacity from below to above $5,000 per MWh
• Withdrawal of some low-priced capacity.
The above graph shows how the rebidding incident pushed prices up from $110 to $120/MWh in South Australia.
24, 25 and 30 May 2023, Queensland and NSW
The wholesale price of electricity exceeded $5,000 per MWh for five 30-minute periods during the evenings of 24, 25 and 30 May in Queensland and NSW.
There was relative price alignment across Queensland and NSW during these high-price periods, so our analysis treats these as one region.
A combination of factors drove these high prices:
• High demand due to cold weather and ongoing generator outages contributed to relatively tight supply/demand conditions
• A planned network outage south of Sydney from the middle of May to early June limited the region’s access to cheaper generation from southern NSW and Victoria
• Mt Piper experienced boiler issues late in the afternoon of 24 May reducing its available capacity by around 420 MW on 24 and 25 May
• Rebidding contributed to the high prices on 24 and 30 May but not 25 May. All but one of these were for technical reasons.
High prices were not forecast on 24 or 30 May but were forecast for 25 May which had similar market conditions to the other 2 days.
The above graph shows how wholesale prices increased in New South Wales on 24 and 30 May, when rebidding instances were recorded.
12 June 2023, Queensland
The wholesale price of electricity exceeded $5,000 per MWh for a 30-minute period during the evening on 12 June 2023 in Queensland.
The 30-minute price to 5.30 pm was $5,111 per MWh. The high price was not forecast. The above graph shows how wholesale prices increased from $119 to $123/MWh around the time of the rebidding.
A combination of factors drove these high prices:
• Loss of available generation in Queensland due to 2 units tripping
• Constraints on the interconnectors between NSW and Queensland limited access to cheaper generation from NSW
• Wind generation was low, below 140 MW
• Technical limitations on some generating units prevented capacity below $5,000 per MWh from being dispatched in time
• FCAS co-optimisation for one of the high-priced dispatch intervals
• Rebidding contributed to high-priced outcomes.
28 June 2023, South Australia
The wholesale price of electricity exceeded $5,000 per MWh for the 30-minute period from 7:30 a.m. to 8 a.m. on 28 June in South Australia.
The 30-minute price to 8 a.m. was $5,953 per MWh.
A combination of factors drove this high-price event:
• Low output from wind generation reduced the amount of low-priced capacity available as it typically offers negative prices
• Planned network outages impacted the Heywood and Murraylink interconnectors meaning that South Australia had limited access to cheaper generation from Victoria
• Rebidding of capacity from low to high prices contributed to higher prices.
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