Helping explain why Queensland power prices surged

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.