After what seems like months of negative spot prices due to the increased penetration of renewable generation into a market, with lower than normal demand, we saw a glimpse of volatility yesterday.

In QLD for dispatch interval ending 09:45, we saw the first real spike for 2020. The 5-minute price reached $15,000/MWh!

What caused it?

• Generation units tripping?

• An increase in demand?

• A constraint, or something else?

Prior to the price spike everything looked normal. Demand was tracking as expected. Generation availability was good. There were no unexpected constraints that could cause a price spike.

The only thing I could see was that it looked like demand and supply moved around a bit, before and after the event.

It should be noted that following the 5-minute price spike, which caused generators to ramp up in load, as a result of a higher spot price and the raise of Frequency Control Ancillary Services (FCAS) which also increased in price, the following two 5-minute dispatch intervals dropped to negative $1,000/MWh, as a result of oversupply. This quick reversal in price resulted in spot exposed generators changing their output to minimise exposure.

From the available market data, no units tripped to cause the price spike.

It was likely the result of forecast renewable generation, forecast demand constraint and the generation bid stack that resulted in Australian Energy Market Operators (AEMOs) National Electricity Market (NEM) dispatch engine, resolving a 5-minute $15,000/MWh price.

Most of the inputs outlined above cause spot prices to increase but not spike. For this reason, I would lean towards a system constraint in North Queensland, limiting renewable generation north of Gin Gin. This would trigger these results causing a rapid jump in price.

I have previously experienced a similar situation in my years as a Trader, dispatching units within Queensland. This experience has taught me not to just look at changes in generation and constraints in isolation. It has taught me to dig deeper and assess if there were any sudden changes in load.

In Queensland, a large load is the Wivenhoe pumps and as expected Pump 1 at Wivenhoe started at dispatch interval ending at 09:45, pulling an unexpected 245MW from the grid, sending the price to $15,000/MWh.