Australia’s has developed world's “most volatile” electricity market
Unplanned outages across ageing coal power plants and extreme weather events are helping make Australia’s electricity market the most volatile in the world, according to new research.
Across 39 global electricity markets, Australia’s National Energy Market has the widest spread of high and low prices across each day.
Volatility is measured using the average one-hour intraday spread for a year of data – that's the difference between the highest and lowest wholesale price during a given hour.
Australia's volatility is driven by significant supply issues, including unplanned coal power plant outages or transmission line problems from natural disasters like cyclonic winds or bushfires.
But price fluctuations are also connected to Australia’s world-leading solar penetration, which pushes prices down during the day, increasingly sending them into negative territory.
The trouble with this is that when the sun goes down, costly coal and gas generators jump back into the mix, causing prices to soar.
Coal plants, in particular, are unsuited to this sort of demand, particularly as they edge closer to their use-by dates. They lack the flexibility to jump in and meet any gaps in demand.
The solution is more storage and other energy market infrastructure that will optimise the use of power generated from solar and wind, shifting it to where it is needed, when it is needed.