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An Overview of the Australian National Electricity Market. Brian Spalding Chief Operating Officer. NEMMCO – Overview of Operations . Framework of NEM Market Operation Power System Operation Successes and Issues. The Framework. Australia’s National Electricity Market - PowerPoint PPT Presentation
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An Overview of the Australian National Electricity Market
Brian SpaldingChief Operating Officer
2
NEMMCO – Overview of Operations
Framework of NEM
Market Operation
Power System Operation
Successes and Issues
The Framework
4
Australia’s National Electricity Marketcovers the Eastern and Southern interconnected electricity system
Scale
0 1,000km
5
NEM – The Parties in the NEM
6 State jurisdictions
100 Registered Participants • 5 main Transmission companies • 15 main Retailers • 20 main Generating companies
- 260 generating systems totalling 36,700MW
Approx. 7.7 million customers
Maximum Demand 32,000MW and 190TWh
6
NEMMCO – Market Operator and System Manager
NEMMCO the only Market and System Operator
NEMMCO• Operates, determines prices and settles the physical
spot market • Responsible for power system integrity• Co-ordinates inter-regional transmission planning
Market
Market processes determine generators’ loading targets and prices each 5 minutes.
8
NEMMCO’s Core Task
Power system security
Qua
lity
of S
uppl
y
Generation O
ffersOpe
rate
with
in li
mits
Power system reliability
Prescribed standards
The Task
To maximise the value of trade
in electricity while managing
the power system
9
Pool
R R
WholesaleCustomer
G Generators
Generating Company
Market Customers(Retailers)
End Users
G GG
Wholesale Market Structure
10
NEM – The Pool
Gross pool (Compulsory)
Generator production levels set each 5 minutes
30 minute trading interval price in each of 6 regions
Annual settlement transactions about A$7B (US$5B)
No physical delivery contracts as Financial instruments between participants manage pool price risk
11
SA
Tas
VicSnowy
6 Regions
Participants lie within a Region
Generators Paid Regional Price
Customers Pay Regional Price
NSW
G
GGC
C
C
G
CG
NEM Regions
Qld
CG
12
Generators Retailers
Physical Electricity Flows
Dispatch Instructions
Offers
Settlement Payments Settlement Payments
Financial Contract Payments (hedges)
Information Information
Generator – NEMMCO – Retailer Relationships
13
Prices determined each 5 minutes
Price - all regions 5-min
0
5
10
15
20
25
30
35
40
45
$/ MWh Price - all regions 5-min
NSW1
QLD1
SA1
SNOWY1
VIC1
TAS1
04 06 08 10 12 14 16 18 20 22 00 02Wed, 16 Aug 06 Thu, 17 Aug 06
14
Wholesale Prices
Power System Operation
NEMMCO maintains a secure power system,
NEMMCO facilitates a reliable power system,
by informing, constraining power flows, acquiring services or, if necessary, directing the market.
16
Transmission CoysGenerators
Dispatch Optimisation
Forecastconsumption
Data
Offers
NEMMCO
Dispatch and Power System Security
17
Transmission CoysGenerators
Constrain toSystem capability
Dispatch Optimisation
Forecastconsumption
DataTechnicallimits
Offers
NEMMCO
Dispatch and Power System Security
18
Transmission CoysGenerators
Constrain toSystem capability
Dispatch Optimisation
Check integrity
Overrideprocess
Forecastconsumption
DataTechnicallimits
Offers
NEMMCO
Dispatch and Power System Security
19
Transmission CoysGenerators
Constrain toSystem capability
Dispatch Optimisation
Check integrity
Overrideprocess
Forecastconsumption
Data
DispatchLoadinglevels
PricestoMarket
Technicallimits
Offers
NEMMCO
Dispatch and Power System Security
Successes
21
NEM - Successes
Stable operation since 1998
Efficient average wholesale prices and real reductions in most retail prices
High generation availability
Generation investment maintains reliable supply with few interventions
Very active retail transfers (25% pa in Victoria)
No financial failures of Retailers or Generators
Issues
23
Issues
Power system security Accommodation of large scale Wind Generation Generator technical performance and compliance Incidence of multiple contingency events Setting appropriate reserve standards
Industry Structure Vertical integration Horizontal integration Ownership (Government v’s Private)
Prudential Risks of failure Availability of credit support Interest in netting off spot and contract transactions
24
Issues
Market MechanismsLack of demand side responseTransparency and short term liquidity in Financial markets
TransmissionPlanning and operation as a National GridIncentives on Transmission companies
Data and ProcessData volumes with increasing interval metersB2B transactions
25
NEMMCO – Overview of Operations
Framework of NEM – a competitive national approach
Market Operation – which drives the power system operation
Power System Operation – ensuring a secure and reliable system
Successes and Issues – opportunities for further efficiencies