Queensland spot prices on Wed 8th June 2022 … a (discordant?!) Symphony in 3 Movements

As noted before, we’re in the midst of the ‘2022 Energy Crisis’, which may well get worse before it gets better.

(A)  The three movements through the day

In addition to this, however, the pattern of prices we saw in the Queensland region today perhaps also provide illustration of the way in which we’re moving towards weather-related boom-bust cycles in this emerging energy transition.  This pattern has been visible for a number of years … just much more jarring given the overlay of the various factors contributing to this ‘2022 Energy Crisis’.

Movement #1 = Sunrise

In the 07:10 dispatch interval this morning (captured in NEMwatch at the time) we see the dispatch price up at $1,228.15/MWh with ‘Market Demand’ already well in its upward ramp on a cool winter’s morning – but not yet much contribution from solar PV:

We see that ‘Market Demand’ in the QLD region (at 7,604MW) is in the ‘green zone’ relative to historical MIN-to-MAX range.

Movement #2 = Daytime

By the 10:20 dispatch interval, we see the spot price has crashed to $0/MWh as a result of the ramp up of solar PV:

In particular the ‘Small Solar’ contribution (i.e. rooftop PV) has eaten a hole out of Underlying Demand meaning that ‘Market Demand’ has slumped back to 5,040MW at this time.

Movement #3 = Sunset

This evening we had another run of volatility (pretty much a daily occurrence now) with this NEMwatch snapshot captured at 17:50:

The contribution from solar PV has disappeared again for another day, as a result of which (and due to other factors as well) the ‘Market Demand’ has climbed somewhat out of the ‘green zone’ to 7,785MW … and the spot price has hit $13,198/MWh.

(B)  Orchestrating this better

There’d not be many who think that what’s happening currently is a symphony Stravinsky would be proud of…. the greater challenge is understanding what to do about this.  There’s certainly plenty of opinions being touted.

In the GRC2018 and then into GenInsights21 (in Key Observation #2/22) we wrote about the ‘schism’ between ‘Anytime/Anywhere Energy’ and ‘Keeping the Lights on Services’ – with what happened today in Queensland a demonstration of the emerging challenge (dialled up to 11 because of the ‘2022 Energy Crisis’).

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Yesterday in the AFR, Colin Packham and Patrick Durkin wrote how ‘CEOs back capacity market, but divided on coal’, following discussion at Energy Week.

The progress on a Capacity market was going to be discussed today at the emergency meeting of Energy Ministers (whatever that grouping is going to be badged these days).

I note on RenewEconomy today, Declan Kelly writes that the ‘Capacity mechanism isn’t the right fix to this energy crisis’ … and I notice this discussion is being picked up on social media elsewhere (like Declan here, and with Joel giving it a boost).

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Back in 2015 I wrote about some concerns I had … and still have … in relation to this potential change).

1)   Whilst I have concerns about what’s proposed, I’ve also not really seen any other suggestions that would seem to me to address the underlying challenges.

2)  Until we have that, it seems likely we’re going to have to get used to this cacophony of squawks – both in relation to pricing patterns, and also in relation to opinions about how to resolve these challenges.