Tesla big battery setting market prices, including at $14,200 cap

Tuesday’s story about the shift of focus from the Tesla big battery of testing and showboating to some serious money-making certainly sparked a lot of interest, as do most stories about this fascinating and important new technology.

Tuesday’s story, however, may have given the impression that the Tesla big battery, known as the Hornsdale Power Reserve and operated by Neoen, was just following and cashing in on market gyrations.

Paul McArdle, from Global-Roam, the authors of RenewEconomy’s popular Live NEM-Watch widget, has spied another new development. The Tesla big battery is not just cashing in on price spikes, it is helping to set them.

This graph below sent through by McArdle illustrates how. Take a deep breath and find your reading glasses – and click on the graph to enlarge if you need to.

The key is the dark red – which are top of the range bids. Hornsdale set that price for capacity of 30MW and above, but the key shift came just before 2pm (grid time) last Thursday, when it bid all its capacity into that range.

That bidding pattern was recognised by the Australian Energy Market Operator, which named it as one of the price setters that pushed South Australia’s wholesale market up to the market cap of $14,200/MWh.

As McArdle notes, the Tesla big battery appears to have learned something about bidding behaviour from the gas generators, who rarely hesitate to push the market up, and to price caps, when they can.

Whether this becomes part of Hornsdale’s regular bidding strategy, or whether this is just part of the new technology’s voyage of discovery, remains to be seen.

Certainly, many in the market would be disappointed if it turned out that Hornsdale emerged as just another player exploiting its market power.

Perhaps that will end when more batteries are in the grid, rules that encourage such technology are in effect (such as 5-minute settlements and inertia markets), and when the operators, owners and rule makers get their minds around how this fast-speed inverter-based technology can change the market.

(Update: It has also been pointed out to RE that under the contract to provide system services to the SA government, Hornsdale is required to bid at $14,200/MWh  for government FCAS so as “not to interfere in the market”.

It does not necessarily mean that the bids are cleared and only occurs when AEMO moves to a situation called VOLL (value of lost load), when the market reaches its cap as the supply/demand balance reaches a critical area).

On the subject of Hornsdale, McArdle also sent us this graph below, showing Hornsdale discharging at 100MW yesterday afternoon, and the intense activity in the battery.

It will will likely be busy again this long weekend, with the Bureau of Meteorology forecasts temperatures of more than 42°C in Adelaide on Friday and Saturday, and AEMO earlier this week warning that forecast temperatures would be above the normal operating range for the big fossil fuel plants.

And, just on our Live NEW-Watch widget, it now has a feedback button so you can send questions about its data directly to the people who should know the answer.