Following on from the significant piece of analysis we performed about the nature of volatility in the energy market (separately noted on WattClarity® in articles such as this one) we were tasked with speaking at All Energy in October 2013 to help our audience understand how renewable energy might integrate into the broader energy market in future years.
As part of this presentation, we provided this animated walk-through of one particular day in the Queensland region of the National Electricity Market (20th December 2012) which saw instances of price volatility:
This animation was prepared using our ez2view detailed market dashboard for the NEM and helps to identify some of the variety of factors that can generally be seen to interact to produce spot price volatility.
On a number of occasions through summer 2012-13 we were called on by our clients (and others) to explain why prices were doing what they did in Queensland over that volatile summer.
Our CEO, Paul McArdle spoke at the EUAA Queensland Energy Forum in Brisbane as an experiment to see if it would help to convey the complexity of the interaction between different variables – we put together this movie replay of a 13 hour stretch on one of the early volatile days that featured a number, but not all, of the contributory factors. It’s not fully polished.
Following a period of market volatility in the SA and VIC regions of the National Electricity Market, one of our clients noted to us the following:
“In recent days with volatility in SA and VIC driven by unforeseen constraints the ez2view tool has proven very useful. It’s an intuitive way to quickly get to grips with a new constraint and work out who/what is affected. I can confirm that it is the reference I use in these situations”
Matt Shanahan – Spot Trader, EnergyAustralia
14th of December 2012
It’s always nice to hear from our customers that what we strive so hard to build does deliver the benefits intended.
In particular we’re pleased to note that ez2view was particularly useful when the market stepped outside of ‘normal’ and threw up something a little different. It’s those occasions when opportunities can really arise, and we like to help our clients make the most of them.
Our CEO, Paul McArdle has provided insights to Duncan Hughes from the Australian Financial Review in regards to how a power upgrade delay may cost energy users.
The article begins:
“DEFERRING until 2015 a $120 million upgrade of an electricity interconnector between Queensland and NSW will cost energy users about $5 billion in higher charges, major energy users say.
They claim an arcane formula – called the regulatory test – used to assess the merits of boosting the interconnector fails to take account for the real impact of the outcome on their costs.”
With the author quotes Paul commenting on the situation’s effects:
“Paul McArdle, managing director of market monitor NEM-Watch, said higher generating prices in summer peak periods would raise costs by $690 million a year, or about $5 billion for the next seven years.”
In December 2007, wholesale electricity prices hit the maximum of $10,000 per megawatt hour for supplies into the national electricity grid from Queensland. Journalist, Nigel Wilson from The Australian sought insights from Global-Roam to explain the situation to his audience:
According to electricity industry monitor Global-Roam, the high Victorian demand resulted in the instantaneous reserve capacity margin in the NEM falling to 11.7 percent. While the margin has not dropped below 12 percent since the NEM was established in the 1990s, in June it dropped to about 7 percent on two successive evenings, meaning there was little spare capacity in the system.
With our CEO, Paul McArdle commenting on might have caused the price to surge:
Global-Roam’s Paul McArdle said the surge in demand this week might have been caused by the market being surprised by an earlier than expected peak in demand, with generators offline for maintenance to prepare for the anticipated peak of 33,000MW or so expected in January/February.
He noted also that lightning strikes in Queensland and South Australia on Friday meant NEMMCO downgraded transmission capacity from South Australia and from Queensland and reduced the flow into the NSW-Snowy-Vic transmission interconnector by about 700MW.
Mr McArdle said this made the shortage of generating capacity in Victoria more significant — and as a result, prices shot up until generators could respond.