Power Demand across the NEM

Weather conditions for the month of August across Victoria were similar to those of July – generally warmer than most other regions, with a few key observations to be made in both month-on-month and year-on-year comparisons.

Maximum demand for August was lower than the month previous across all regions in 2018, with average demand less by up to 300MW in all regions except for Tasmania (where it was the same as July 2018).

Throughout August this year Queensland was an average of up to 1.5 degrees cooler than August 2017, and as such average demand was higher than the previous year by a 100 MW. Conversely, South Australia was warmer on average than last month as well as August 2017, with its average demand lower by more than 100 MW.

Supply side factors

Throughout August, New South Wales had approximately five large thermal units offline, while others remained at reduced capacity. This accounted for over 3000 MW of capacity unavailable to meet demand. As a result, pricing in the NEM for the month was higher in New South Wales.

Interconnector flows across the NEM throughout August typically flowed toward New South Wales to make up for the shortfall caused by the outages. There were several occasions where the interconnectors were constrained which led to higher prices, although the maximum price in all regions remained below $450/MWh.

Queensland had on average three large thermals offline for the majority of the month, but this was mitigated with numerous other sources available in the way of gas and solar generation.

In South Australia and Victoria, wind generation was generally higher month-on-month, and up to 25% higher year-on-year, placing downward pressure on prices. South Australian wind generation continues to be constrained at times due to supply limitations.

Output from the Snowy generators has been lower than usual due to drought and low levels in Lake Eucumbene, which are currently around 16%. Although there is snow on the Great Dividing Range ground conditions are dry, resulting in less surface runoff into storages.

On August 25, the NSW-QLD interconnector tripped while New South Wales was importing 850MW, resulting in industrial load shedding in all regions except South Australia (although their interconnector also tripped). AEMO is conducting a full investigation.

Spot Price Outcomes

Tasmania experienced the biggest change in spot price outcomes, dropping from a monthly average of $97.21/MWh in August 2017 to just $24.88 In August 2018.

Tasmania’s conditions can be attributed to their hydro generators working at high capacity since the start of July this year, as well as the Basslink being constrained north to the mainland.

South Australia also experienced a substantial decrease due to lower priced wind generation, which was required by AEMO to assist with the management of system security. The three larger regions of the NEM – New South Wales, Queensland and Victoria – saw an increase in average prices from July. New South Wales led the charge due reduced generation from Snowy, as well as coal fired capacity outages throughout the month.