Electricity wholesale price forecast for the next 30 mins is $15,000/mw, up from $300...
aemo.com.au/en/energy-systems/electricity/nat...
aemo.com.auPosted Jun 2, 2022, 7:44 AM UTC
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aemo.com.auI've done a heap of time in power generation and we always had the spot price on the screen. Spikes like this are quite common.
Also common are prices going into the negative
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This is a feature, not a bug.
$15k is the market cap, and is reached from time to time. Sometimes shit hits the fan: say you have low wind, low sun, and then a coal plant or two trips then you hit the market cap. Or you could have bush fire taking out power lines etc.
Importantly, most power users are covered by long term contracts - about 90% of the market I understand but could be wrong.
There are generators that are only needed a few times a year as the backup of the backups - this is how they get paid.
The average price of 300-500$/MWh is more of a worry, and is due to a combination of factors like the war in Ukraine, damage from floods to coal plant supply lines etc.
but this is massively compounded by 10 years of inaction from the Aussie government. New generation and storage is needed to replace ageing coal plants and since there hasn’t been an orderly management of this process you get boom / bust cycles.
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What’s going on here?
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Move along, nothing to see here.. it's transitory.. supply issues don't y'know
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Yeah when companies are telling customers to find a new supplier you know shit is about to go down.
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Ah yes, I got one of these notices recently
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That just cannot be accurate. Regardless people are seriously going cold this Winter or they’ll be bankrupt.
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Yeah it seems just crazy hey!
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I GENUINELY think things are actually going pair shaped in 2022. There is just too much going wrong. Like WAY too much for something not to break. I am no chicken little either, generally tilt to positive but this year man, post Covid it’s…….a big issue me thinks.
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Nah it just spikes like that at times. Drops quite quickly usually though. The magnitude is not anything to particularly worry about
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The average spot price, looking at the link in OP, looks to have raised steadily over the last few months from ~90/mwh to nearly 500/mwh daily average.
That's seems like something to worry about to me?
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Oh yeah the avg spot increasing is causing heaps of issues! I just meant more that it spikes up to $15k for the odd interval. That’s just normal market operation.
Interestingly they don’t have quite the same situation in WA because they reserve some of their gas for domestic purposes unlike the east coast.
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Origin supply a good chunk of gas to the market. 30% rings a bell. Not sure of comparison to WA supply though.
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What’s behind the wholesale stuff going on with companies telling customers to find a new company?
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So there’s a couple of things. Retailers without generation lock in fixed prices to customers mostly (or are forced to with residential tariffs) but then have to buy from the wholesale market. Often they will hedge, but rather than over buy they will leave some exposed to spot. So then they have to hit the spot market at inopportune times it can really squeeze margins.
But the bigger one is that the energy market operator needs them to provide them some cash reserve when prices go up and it’s based on number of customers. For large companies with lots of spare cash, they can cover it. For smaller retailers they have to find the cash and if they can’t, then shedding customer count is the only way they can get to a point where they have enough to meet their reserve needs
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Ahhhh okay that makes complete sense.
Thank you for helping me with that mate!
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Off grid life 😎
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Ey......nice one!
Hope you have an alternative to the Tesla batteries though. They have a nasty habit of going up in smoke.
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Nar mate Tesla is overpriced garbage - unless you are on grid and discharge your car at peak times (not sure if that ever came to fruition).
20kw arrays with 46kwh - does 4ish days no sun but have a back up Jenny.
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Meant the batteries for the house as backup.
Definitely looking at solid batteries and battery alternatives moving forwards. No point having the self-reliant homestead if this happens.
Same applies with the Model S. It's an absolute fucking beast of a machine with faster acceleration than I can recall, but the battery life isn't great and when they go, they fucking go...
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Yeah, sorry to clarify the tesla home packs were talking about a feature where you can discharge the car back into the grid at peak times for some good $$.
I went lead acid for the cost, reliability and risk.
Model s is nice, would be a thrill to drive, I’ll stick with the cruiser for now haha
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Have you heard of Redflow? They are a Brissie based company that make zinc-bromine batteries which are inherently safer than lipo batteries, no explosions possible as far as I understand it. I have been watching the technology and Redflow in particular for many years now, it has been slowly maturing and improving for some time and has so much potential.
There is a large, long term comparison of home storage batteries at batterytestcentre.com.au where you can read more about real world testing, issues and advantages of the technology.
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Can someone explain to me how, as a coal producing country, with a primarily coal based power infrastructure, how the price has exponentially increased?
At peak times the demand in the market can exceed available supply. Generally this happens around 4-7pm when the CBD heads home and switches on aircon's or heaters but the big smelters (and other industries) are still running. The sudden and dramatic shift in demand caused by 2.3million 1200w heating elements all turning on around 6 to cook dinner has always caused problems.
The issue is that now we have solar (and to a lesser degree wind) which provides cheap (essentially free) energy during the day which switches off around 4-6pm. Now this wouldn't be an issue if it wasn't for the legacy production methods still in the system.
Essentially pretty much all Australia's coal generation and most of its gas power generators are designed to run at near full tilt all day everyday for the entire operational life of the generator. The need to ramp these generators up and down to compensate for the changing solar inputs in the system has degraded the generators and increased there operation costs. This coupled with the uncertainty in Aus regarding carbon policy has meant that there has been minimal investment in there upkeep (thus the failures of late)
This has all resulted in the present perfect storm of grid instability and rapidly rising prices.
Don't worry the market will sort it out soon. /s
Awesome explanation. Thank you.
A real clusterfuck that we can thank the previous government for by the sounds of it.
Actually this has been around for a long time. Decades. I once worked as a weather forecaster doing briefings for hedge funds who would speculate on price spikes like this caused by sudden demand increases caused by the weather. We would try to predict weeks in advance when a heat wave would come through and the hedge funds buy up the power production futures for xyx hours and make money selling at a premium on the day.
Er...he's not really correct you know.
Not to defend the previous government or there policies (which probably made things worse). But this outcome was always going to happen for a number of reasons. Renewable power has been cheaper for nearly a decade compared to new fossil to construct. This means that the shortfall would always have occurred.
The battery tech required to fully transition has only really been viable economically speaking for the last 3-4 years at most (and even less time as a base load option). Likewise the productive capacity for batteries still isn't there. The only exception to this is pumped hydro (which the libs funded in snowy 2.0) but even then Australia lacks the water resources to pull that off at sufficient scale.
The laws of economics don't care about politics, investments only happen if they promise a return, and only happen at sufficient scale if capacity exist. Neither metric has really been met yet in any country. The ukraine war just accelerated something that was already happening (and probably made it worse)
Coal was a cheap and reliable (for the time) source of power 20 years ago but it hasn’t been cheap or reliable for a long time…..
Look at a coal and gas price chart. Add to that coal power plants failing unexpectedly at regular intervals and then throw in the odd day where wind or solar drops and that’s how you get it. Coal and gas power generation costs on the nem are significantly higher than renewables at the moment.
Yes.
FUCKERY.
Also loss of national sovereignty, privatisation, and the usual bullshit.
This is another triumph of 'the free market' which is anything but. Largely, but not completely, Macquarie is to blame for this. But fuck it, who cares about historical analysis as it impacts current trends anyway?
Remember the current and ongoing spikes the next time someone says "Durrrr....privatisation leads to lower costs and higher efficency! The government shouldn't be involved in critical infrastructure like power and comms, the free market knows best!"
Fucking hell.
Sometimes I think the whole nation is in a deliberately induced coma.
One unit down at Loy Yang and Callide. Eraring having issues getting coal supplied to them.