The day is not over yet, but we thought you would be interested in the attached snapshot highlighting the first of the occasions on the day when prices jumped to VOLL in SA and VIC as a result of searing temperatures stopping the tennis, and melting VIC and SA into new demand records for each region.
On 19th January, high prices were sustained in SA for several hours, bringing the Cumulative Price within a whisker of the $150,000 threshold, at which prices would be capped.
With demand soaring, and interconnectors constrained, generators in South Australia and Victoria took what opportunity they had to force the price high. So successful were the South Australian generators that the Cumulative Price Threshold was reached in South Australia and, under NEM Rules, an Administered Price Cap was applied for a period of time.
In March 2008 (after summer had officially ended) South Australians were forced to endure a record 15 straight days of temperatures climbing above 35ºC. Victorians also experienced extreme heat for…
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).
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.
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.
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.
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.