The NEM is a spot market where supply and demand are matched in real time under the observation of an industry authority. Generators supply the market with electricity at regular intervals; retailers and wholesalers respond by submitting offers every five minutes,every day. Based on demand and cost-efficiency, The Australian Electricity Market Operator (AEMO) determines the volume of generators required to produce electricity. The AEMO then dispatches these generators into production.
A dispatch price is determined every five minutes, and six dispatch prices are averaged every half hour; this determines the spot price across the NEM. AEMO uses the spot price as the basis for the settlement of financial transactions – the price wholesalers or retailers pay – for energy traded in the market.
Sometimes the spot price is $0. This is often true, briefly. It can also mean the price information is unavailable for a time and not an actual price. Always ask us if this is the case!