Weekly summary of events in Summer 2005-2006

The following chart illustrates how the price and demand trended for each region of the NEM across each week of summer:

There are many, many observations that can be made about the way the market operated based on this data, but the following are particularly noteworthy:

1) As would be expected, peaks in prices tended to coincide with peaks in demand;

2) Demand in Queensland and Tasmania tended to be fairly constant right across summer, whereas some weeks in NSW, Victoria and South Australia experienced much higher peak demands than other weeks;

3) Thankfully, the times of peak demand in NSW did not coincide with the times of peak demand in Victoria. This has been fairly typical of summer demand patterns in the NEM in recent years. If this were to change in future, it would place considerably more pressure on available supplies.

Each week is addressed in further detail in the table below. For ease of reference, we have reversed the listing of events (so the most recent week is first in the table).

The Week beginning Sunday
26th February 2006

Last week of Summer

As seen in the summary chart above, this week produced very mild outcomes in the market, driven in large part due to very low levels in peak demand.
The Week beginning Sunday

19th February 2006

This week saw a continued decline in peak demand in NSW from its peak at the start of the month.

In contrast, demand in Victoria peaked again, bringing with it high prices in Victoria and (to a lesser extent) South Australia. Indeed, the demand experienced in
Victoria (on Friday 24th February) exceeded the previous high level of 8,552MW for summer, set in January.

This situation is illustrated in the chart below:

Click on the chart for a better view

As can be seen, the high prices shown for Victoria that week resulted mainly from a price spikes experienced on Thursday 23rd and Friday 24th February (just prior to the peak in demand). Click on the link included here for further analysis of this event.

The Week beginning Sunday

12th February 2006

As seen in the summary chart above, this week produced very mild price outcomes in the market, driven in large part due to very low levels in peak demand in most regions.

It is noted, however, that Queensland experienced a new record peak in demand of 8,280MW on Tuesday 14th February 2006. This was still not enough to deliver any pricing above the high for the day of $25.55/MWh in Queensland.

The Week beginning Sunday
5th February 2006
This week saw very low average prices across the NEM (below $21/MWh average across the week in all mainland regions). These prices are summarised in the following chart.

Click on the chart for a better view

As can be seen from the chart:

(a) Except for 2 half-hours in Tasmania on Tuesday 7th February (when the price rose to just over $1,000/MWh), prices in Tasmania remained at and around $30/MWh for the whole week. The events of Tuesday 7th February in Tasmania are further examined on this linked page.

(b) Except for a modest price spike on Monday 6th February on the mainland (and a few other times in South Australia), prices remained below $20/MWh for almost the entire week.

The Week beginning Sunday
29th January 2006
This week saw a new record demand in NSW of 13,292MW on Thursday 2nd February. Correspondingly, average prices were above $100/MWh in both NSW and Queensland – but the price spikes did not transfer to the southern regions.

These market outcomes are summarised in the following chart.

Click on the chart for a better view

As can be seen from the chart:

(a) The high average prices in the week have resulted almost entirely from the price spike experienced in Queensland and NSW (and Snowy) on Thursday 2nd February. This was at the time of the new peak in demand in NSW (which followed on from a very similar day the previous day);

(b) Note also that there is a reduction in Queensland load of about 200MW at the time of peak in price on the 2nd February.

See here for a report on Thursday 2nd February for further details.

The Week beginning Sunday
22nd January 2006
As predicted, this week the market delivered huge demand levels, and high prices in all regions:

(a) Peak demand levels (as can be seen in the summary chart at the top of the page) 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) As noted above, peak demand levels in Queensland were fairly steady (and high) for most weeks of summer.

(d) We know that, in combination, a new NEM-wide peak demand target of 30,994MW was set on Monday 23rd January. See here for a report on Monday 23rd January for further details.

These market outcomes are summarised in the following chart.

Click on the chart for a better view

Note in particular that:

(a) That the demand shown for Victoria on the date of peak NEM demand is considerably lower than that shown for 3 days later, Thursday 26th January;

(b) On that day, the effect of demand-side response in the market can be seen in the reduction in load shown between 13:30 and 14:30 market time in the lead up to the spike in price. Even this response could not constrain the prices that were maintained up to 17:30 (market time).

(c) See here for a report on Thursday 26th January for further details.

Please note that these reports were completed for weeks ending on Sunday – so even though the table labels below has been adjusted to the more traditional week (to reflect the timeframes above), the analysis still refers to a Monday-to-Sunday week.

The Week beginning Sunday
15th January 2006
Regular as clockwork, the start of the Australian Open saw temperatures soar across southern Australia, leading to substantial spikes in prices – particularly for Thursday and Friday. This was reported in sources such as:

This article from the Adelaide Advertiser on Sunday 22nd January; and

This article from Melbourne’s Age on Monday 23rd January.

Note that this article mentions a figure of 1,500MW as the amount of industrial load that was not operating because of the weekend.

To follow these temperatures, South Australia experienced a new record actual demand of 2,876MW on Friday 20th January, which was almost simultaneous to a peak actual demand in Victoria (second-highest all-time) of 8,552MW.

Also of note during this week was the commencement (on 16th January) of the provision of Reserve Trader services to NEMMCO by 4 companies (VicPower Trading, Energy Response, Smorgon Steel and Zinifex). For further details about the reserve trader process, please see this NEMMCO notice.

For further information, please see the attached PDF “Week to yesterday” report, as developed from NEM-Review, summarises the activity seen in the market over the period.

(b) We’d like to include a more detailed look into the price spikes experienced on the 19th
and 20th, but have just run out of time – feel free to do so yourself with your own copy of NEM-Review.

The Week beginning Sunday
8th January 2006
No report completed for this week.
But that doesn’t mean that nothing of note happened. We just have not had time to put it together in a report for you – feel free to do so yourself with your own copy of NEM-ReviewTM.
The Week beginning Sunday
1st January 2006
Unlike the week before (when there was plenty of excitement in an overheated market), this week saw much milder temperatures and hence more subdued market prices (with a couple of exceptions).The attached PDF “Week to yesterday” report, as developed from NEM-Review, summarises the activity seen in the market over the period.

From this report the following three events can be seen:

(a) A price spike on Tuesday 3rd January in Queensland and NSW

(b) A price spike on Thursday 5th January in Tasmania

(c) A price spike on Sunday 8th January in South Australia

The Week beginning Sunday
25th December 2005
In a week which is traditionally very subdued in the market, the NEM sweltered in temperatures in excess of 40 degrees and an exceptional NEM-wide demand (about 30,000MW) was recorded, as shown here:

What makes this exceptional is that there is a large amount of commercial/industrial load during this week that is traditionally off-line for holidays. What would the demand have been, had it been a normal working week?

Note in this image that the NEM-wide Instantaneous Reserve Plant Margin (RPM) reached a low of only 16%, which meant that supplies were being stretched to the limit,
even though demand was lower than it might have otherwise been (though it should be noted that some generators had taken advantage of the slackening demand to perform essential maintenance).

The low level of instantaneous reserves is also reflected in the high prices exhibited right across the mainland NEM regions. Unfortunately Basslink was not operating in commissioning during this period.

The attached PDF “Week to yesterday”report, as developed from NEM-Review, summarises the activity seen in the market over the period to New Year’s Day.

It’s been reported (such as in
this article in the Age) that the high prices triggered a call on
the demand-side response aggregated by Energy Response – along with, we presume, the other energy users
(some of whom are our clients) who have adopted the approach of taking a more active role in the market.

The events of the Friday 30th December, and surrounding days have been singled out for further analysis.

The Week beginning Sunday
18th December 2005
We did not perform any analysis this week – but you could do this yourself with your own copy of NEM-ReviewTM!
The Week beginning Sunday
11th December 2005
We did not perform any analysis this week.

Well, we have to get our work done sometime, don’t we 🙂 !

The Week beginning Sunday
4th December 2005
For several days in early December, temperatures reached 40 degrees (or thereabouts) in many parts of QLD and NSW. As a result, airconditioning load (and hence total demand) soared in both regions. Record all-time regional demand went close to being exceeded in both regions. This can be clearly seen in the following image, with a near record demand in QLD on Tuesday 6th and in NSW on Wednesday 7th (please click on the image for a larger view):

The snapshot of trading in the NEM taken from NEM-Watch during the afternoon of 7th December illustrates the volatility produced that day (again, please click on the image for a closer view):

The high demands resulted in very high prices being experienced in both QLD and NSW (and also the SNOWY region), as seen in the above image.

Both VIC and SA were insulated from the high prices because (at least in part) of the fact that transfers over the SNOVIC interconnector were constrained to minimise negative inter-regional surplus.

After waiting till the next day (when generator dispatch data is released by NEMMCO), we have been able to continue our analysis in the following report on the events of 7th December 2005.

The Week beginning Sunday
27th November 2005
No analysis performed for the first official week in summer.

About the Author

Paul McArdle
One of three founders of Global-Roam back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

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