A problem with predicting the output of South Australia’s wind farms was “the major contributing factor” in a major spike to the wholesale electricity price in mid-July, the Australian Energy Regulator (AER) has found.
The spot price soared to $7,068 a megawatt hour (MWh) on the morning of July 13, eclipsing year-long average prices of about $60/MWh.
It came just six days after a similar spike, which the regulator blamed on a range of factors including outages to the Heywood interconnector, low wind output, the closure of the coal-fired Port Augusta power stations and difficulty sourcing gas for thermal generators.
The extreme price volatility in July prompted the SA Government to take the extraordinary step of intervening in the energy market at the request of heavy industries, which had threatened to temporarily curtail their operations unless spot prices were brought under control.
State Energy Minister Tom Koutsantonis responded by convincing ENGIE, the owner of the Pelican Point Power Station, to temporarily restart the mothballed gas generator to shore up baseload supply.
In the July 13 outage, the AER found “the major contributing factor to the high price was wind forecast error.”
Half an hour before the spike, wind had been expected to deliver about 820MW of energy to the grid, but actual output was about 600MW.
With upgrade work on the Heywood interconnector preventing the flow of electricity from the state’s South East, increased flows from the smaller Murraylink interconnector in the Riverland partially offset the wind shortfall.
But at 6:20am that interconnector reached its limit.
Spot prices soared due to several reasons
With all other low-priced generation either fully dispatched, limited or unable to start quickly enough, 18MW of $14,000/MWh priced electricity was dispatched from the Torrens Island gas power station.
The following day, spot prices in South Australia were again extremely volatile, exceeding $4,500 on two occasions during the morning, then peaking $6,918/MWh during the 6:30pm trading interval.
The Australian Energy Regulator sets out several reasons for the 6:30pm spike:
• Network outages to complete augmentation works on the Heywood interconnector
• The change in generation mix following the closure of Port Augusta’s coal-fired power station
• While there is 1,600MW of wind capacity installed in SA, on the day it was generating about 240MW
• two gas-fired generators (Torrens Island B4, Dry Creek 3) were on planned outages
• the return to service of Pelican Point power station was delayed by start-up issues which decreased the available capacity in SA
The AER found rebidding of capacity did not contribute to the extreme price spikes on either July 13 or 14, suggesting generation companies were not abusing their market power.
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