[Post 2] Later AEMO forecasts moderate demand forecasts slightly – but still looks to be massive

As a quick/brief update to today’s early morning post, here’s a snapshot from NEM-Watch at 12:20 today:


I’ve annotated the image with 3 points:

1)  All-time maximum forecast for this afternoon (only just)

At this point, the highest the demand forecast is predicted to be is 9,480MW in the half-hour ending 17:00 – which would be (just) higher than the highest level reached on 18th January on a dispatch target basis.

This is a little lower than the forecast from early this morning – the following chart from Forecast Convergence in ez2view provides a view of what’s been happening with these forecasts on every 30-minute refresh by the AEMO:


As can be seen:
1a)  There is a fair spread in the forecasts for 17:00 today; and
1b)  The actual demand for 12:30 today was actually higher than all prior forecasts – though this does not necessarily carry through to imply the same for 17:00 (it does show, however, how forecasting is a mug’s game – but one the AEMO has to do (and often get bashed for)).

2)  We’re currently running at tight supply/demand balance

I’ve noted on the NEM-Watch image above how (at 12:20) we were running with an Instantaneous Reserve Plant Margin of below 15% – a key explanation of why prices are elevated (i.e. it’s a natural market response).

3)  AEMO has re-triggered the LOR1 warning for this afternoon

Also flagged is the re-triggering of the LOR1 notice this afternoon, which AEMO had cancelled a little earlier in response to its forecasts shifting around a little (we can see the size of the shift in the forecast above).

As I explained to someone directly over the past couple days with dramas in SA, NSW and QLD (and less so in VIC), I understand the political sensitivity about these sort of notices – but it would smack of misdirected priorities if Ministers of Energy were to be too nervous about these notices being issued:

3a)  It would seem too much like “managing the message” rather than actually fixing the problem of a multi-layered supply/demand crisis in the electricity sector as all these groups have joined together to plead at State and Federal level.

3b)  I should not have to be pointing out that the AEMO issues these notices to elicit a market response – a process which actually works quite well, the vast majority of the time (and, when it does not – such as in SA and NSW, it’s not because of the message, or the messenger).

I ask the more seasoned readers to please excuse my profoundly disillusioned view currently – to me currently politicians seem part of the problem, not part of the solution (more on that later, perhaps…)

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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