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.
Based on forecasts NEMMCO had been providing through their PASA process, we expected that it might prove that this week would deliver huge demand levels, and high prices.
Not to disappoint, the market did deliver high levels of demand in all regions:
(a) Peak demand levels were reduced somewhat from the huge levels the previous week in Victoria and South Australia;
(b) Demand levels were also still building to the record level to be experienced the following week in NSW;
(c) Peak demand levels in Queensland were fairly steady (and high) for most weeks of summer.
(d) In combination, a new NEM-wide peak demand target of 30,994MW was set on Monday 23rd January.
Spot prices spiked across mainland regions this evening – firstly at 17:55 (above $1,000/MWh). and then at 18:00 (up towards $15,000/MWh). Here’s a first look.
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