The following graphic illustrates what NEMMCO had forecast (at Tuesday 17th January, before their update on 23rd January had been released) for date noted above:
(a) This forecast has not changed markedly in more than 6 weeks, which is a cause for concern.
(b) Even more of a concern is the fact that an LOR3 alert level has been signalled by NEMMCO for the peak demand periods of the day:
LOR3 is more dire than LOR2 and means that there is insufficient generation capacity being made available (in SA and VIC in this case) to meet peak demand – in other words, if an extreme demand day eventuates, load shedding will be necessary.
(c) It can be seen from this diagram that the market is pricing in a tight supply/demand balance in the futures prices for the current quarter (especially the peak prices). However, we are still investigating whether the peak price contracts referenced (a low of $72.75 in Queensland to a high of $89 in South Australia) reflect what may actually eventuate in the spot market, given the numerous days this quarter when low reserve conditions are currently forecast.
Paul was one of the founders of Global-Roam in February 2000. He is currently the CEO of the company and the principal author of WattClarity. Writing for WattClarity has become a natural extension of his work in understanding the electricity market, enabling him to lead the team in developing better software for clients.
Before co-founding the company, Paul worked as a Mechanical Engineer for the Queensland Electricity Commission in the early 1990s. He also gained international experience in Japan, the United States, Canada, the UK, and Argentina as part of his ES Cornwall Memorial Scholarship.
We are only in the second week of summer 2015-16, and demand in Queensland has already begun to heat up, hitting 8507MW at 3:05pm this afternoon after another hot and humid day across the sunshine state.
In part 3 of this expanding Case Study of the unexpected price spike on Tuesday 13th Oct, linked to a large & sudden drop in output across 10 solar farms, we dig deeper to explore… including wondering whether it would have been expected in advance.
With hot weather forecast for NSW this Thursday (especially in inland areas) it’s no surprise to see that the AEMO is forecasting higher demand on the day. Linked to this there is also a slight negative (local) surplus generation forecast.
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