Heatwave sends QLD prices soaring

On the back of a 38 degree day, Queensland reached its highest ever electricity demand for a Saturday and prices subsequently soared.

The heatwave that has been afflicting central Australia for days arrived in the coastal areas of Queensland on Friday and helped to drive regional demand into the 'orange' zone across the Queensland region, as shown in this snapshot of 15:05 NEM time taken from NEM-Watch:

Graph for Heatwave sends QLD prices soaring

About Friday, January 3

As can be seen in this snapshot, the demand in Queensland at the time was 8090 MW on a dispatch target basis – only 800 MW or so below the all-time record for the region (hence the orange alert colour for the region, and the region demand box). Demand had climbed further to 8213 MW at 16:05.

We can see that the plentiful spare capacity that Queensland normally enjoys has been whittled down somewhat, leading to a 27 per cent Instantaneous Reserve Plant Margin in the Queensland ‘Economic Island’ which, when coupled with some transmission constraint activity, is enough to deliver a few price wobbles (though, at the time of writing, the price had not fully exploded).

In a tale of two markets, we see the inverse happening in South Australia, where windy conditions have delivered significantly cooler conditions which, when coupled with high output from wind farms in the region, have driven dispatch target demand* below 1000 MW (hence the deep blue alert colour for that region).

Looking to Saturday, January 4

Of particular interest in this snapshot is the area of the table highlighted in the snapshot where we see that the forecast demand in Queensland for the following day (a Saturday!) is forecast to be as high as 8453 MW at 17:00 NEM time.

With a quick reference to this analysis from NEM-Review, where we have filtered the full range of NEM history to look only at Saturdays, we see that (if this was to eventuate) this would represent the highest demand Queensland has ever experienced on a Saturday:

Graph for Heatwave sends QLD prices soaring

As noted in the diagram, the two times where the Saturday demand levels have been significantly high in the past (though still more than 450 MW below the level forecast for tomorrow) were as follows:

1)  On Saturday 22nd February 2008, where we saw significant market activity as documented here at the time, and discussed shortly afterwards at this conference.

2)  On Saturday 12th January 2013, part of the “wacky weekend” where we saw remarkable volatility experienced as one part of a very remarkable summer (see here for an animation of a couple hours on that day).

What ultimately happened on Saturday

A new record for electricity demand in Queensland for a Saturday was indeed reached – with the demand climbing past 8300 MW to land less than 600 MW short of the all-time record for working weekdays.

The 17:00 dispatch interval is recorded here in this NEM-Watch snapshot, showing scheduled demand (measured on a Dispatch Target basis) at 8364 MW, the highest for the day.

Graph for Heatwave sends QLD prices soaring

As shown in the snapshot, the price has spiked up towards the Market Price Cap (of $12,500 per megawatt-hour – compare that to prices prevailing in the other states of $36.32 to $52.99 in graphic above) on several occasions. Similar to last weekend, we see the Queensland demand has climbed past that in the larger NSW region.

Paul McArdle is the managing director of Global-Roam Pty Ltd, a business that provides computer software that helps users to analyse and understand energy markets.

Originally published in two parts by WattClarity. Republished with permission.

*Dispatch Target Demand = the scheduled demand that AEMO has to meet in scheduling market generators.