Weekly summary of events in Summer 2006-2007
We compiled a week-by-week summary of interesting events that occurred in the NEM – from 19th November 2006 through until 16th January 2007 (the day of the blackout).
Articles by Paul McArdle
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.
Our initial review of the blackout on Tuesday, 16th January 2007
Our first review, linked here, was prepared the night of the blackout itself, and provides a chronological history of events, as seen through the NEM-Watch™ application.
Nous Report, into blackout of 16th January 2007
Note about the NOUS Group report on the blackout in Victoria of 16th January 2007
16th January 2007 – Bushfires and Victoria’s blackout
Victoria experiences a large blackout in the afternoon and evening of 16 January 2007, when bush fires cause three main transmission lines to trip. This created chaos throughout much of Melbourne, and represented perhaps the most significant stress the NEM…
11th January 2007 – first spike in demand above 30,000MW
There was a temperature-driven spike in demand across the NEM later in the week beginning Sunday 7th January – culminating in the summer’s first demand peak above 30,000MW (on Thursday 11th January).
On this occasion, the spot price spiked above $1000/MWh in Queensland, NSW, Snowy and Victoria,
8th December 2006 – high demand in South Australia
There was a temperature-driven spike in demand in South Australia on Friday 8th December 2006.
However, demand also spiked on other days in the week, and on those occasions did not lead to the price spikes seen on the Friday.
7th December 2005 – high demand in Queensland and NSW
For several days in early December, temperatures reaching 40 degrees in Queensland and New South Wales cause airconditioning load (and hence total demand) to soar in both regions.
The high demands resulted in very high prices being experienced in both QLD and NSW (and also the SNOWY region). 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
21st November 2006 – demand spike in NSW
There was a temperature-driven spike in demand in NSW on Tuesday 21st November 2006.
These sweltering temperatures combined with bushfires to cause localised blackouts in the Sydney city area, as reported in the Sydney Morning Herald in the article “Power jitters as heat bites”.
Winter 2002 – Generator Market Power
From the start of the NEM through until 2001, the NEM was typified by a pricing dichotomy with sustained rock-bottom pricing in NSW, Snowy and Victoria and high and volatile pricing in the extremities (Queensland and South Australia).
In 2001, the QNI interconnection and many generation projects were developed. This led to the convergence of prices between all regions, and the disappearance of price volatility – circumstances that were a real threat to generator profitability.
In response, generators adopted an approach that came to be known as “the economic withholding of capacity” to engineer volatility into the market throughout winter 2002 – and hence higher prices as a result., and generator behaviour.
26th January 2006 – high demand and price in Victoria and SA
There was a high level in demand in Victoria on Thursday 26th January 2006.
This was especially remarkable, considering that it was an Australia Day public holiday – when commercial (though not industrial or residential) demand could be expected to be somewhat lower than would otherwise be the case.
Coupled with this level of demand was a significant spike in price that lasted several hours.
2nd February 2006 – price spike in NSW and Queensland
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.
23rd January 2006 – new record for peak NEM-Wide demand
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.
7th February 2006 – price spike in Tasmania
This week saw very low average prices across the NEM (below $21/MWh average across the week in all mainland regions).
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.
24th February 2006 – price spikes in Victoria
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 2006.
Our analysis looked at generator behaviour on the occasions of these price spikes.
Weekly summary of events in Summer 2005-2006
Summer 2005-06 saw Australians sweltering in temperatures 40 degrees and above.
In the National Electricity Market, this led to new peaks in demand and (given the tight supply/demand balance) delivered high (and volatile) spot market pricing.
Here we have compiled a weekly summary of events in the NEM over summer 2005-06.
30th December 2005 – huge NEM-wide demand on a holiday!
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.
What made this demand peak more remarkable was that this occurred on a day when, traditionally, a large amount of commercial and industrial load would have been offline for the Christmas & New Year holiday.
2nd February 2006 – NEMMCO’s forecast from 17th January
This article was written prior to 2nd February and drew from the insights gained with our NEMforecastTM product to highlight the looming issue of the tight supply/demand balance forecast for 2nd February 2006.
3rd January 2006 – Outages force QLD price to VOLL
The week started with commotion in Queensland, when the VOLL price ceiling was reached.
Further analysis revealed that this was due to transmission system events and the trip of several generation units within Queensland.
NEMMCO final report about the 5/30 issue published in February 2003
A quick look back at the NEMMCO final report from 2003 about the ‘5/30 issue’
The Parer Review (December 2002) – Towards a truly national and efficient energy market
A back-dated post to provide a ready reference to the Issues Paper and Final Report of ‘the Parer Review’, from back in 2002.