We’ve seen a bit of volatility in the NEM through May:
1) This was mostly in QLD and NSW – such as on Wed 17th May and Sat 20th May and Tue 23rd May and Wed 24th May and Thu 25th May and Fri 26th May and Tue 30th May.
2) But also in South Australia (though we did not write about it).
For NSW and QLD there are plenty of people pointing at the closure of the 3 remaining units at Liddell as ‘the culprit’ (there certainly was a Liddell-related data glitch that did not help on 1st May!) … but the NEM’s a complex machine and it’s very rare that there’s ever a single ‘cause’ for any particular outcome.
This morning I saw an article on the ABC News site titled ‘Australia’s average temperatures plummet in May as Sydney experiences coldest nights in 66 years’ that might also go some way to explain:
… but note that it’s more than just those 2 factors combined …
While the NEM is a complex machine and it’s very rare that there’s ever a single ‘cause’ for any particular outcome, it could be argued that the systemic destruction of reliable coal fired power plants and removal of a material volume of dispatchable generation is the driver.
Notice how most of the price spikes are in the early evening, the head of the duck curve as it were, when solar (and to an extent wind) is less productive, and people are demanding power for cooking (and heating)
It might have been cold, but hardly peak load stuff. Cold overnight temperatures usually result in high daily energy, not necessarily load. (Dare I say the generators make some money!) What has changed is a not insignificant lump of relatively cheap SRMC generation (Liddell) removed from the market, so it all shuffles up the cost curve. Most energy in the NEM is (in reality) settled by bilateral trading arrangements – particularly so for the vertically integrated gentailers. Retailers in unhedged wholesale positions got scorched last winter you may recall. Now the energy served by Liddell is simply being supplied by more expensive sources on occasions when wind (and solar) are missing or the peak demand goes a bit higher and a higher cost generator bids in and settles the market. Your previous remarks about pricing when liquids appear highlight this. Nothing to see here – your new normal.