High-Priced Energy Events Spark Concerns for Consumers
Nov 23
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The Australian Energy Regulator (AER) has flagged potential inefficiencies in the electricity market due to aggressive bidding strategies during high-price events. These strategies, while not technically against the rules, may harm consumers by driving up costs.
Record High Prices and Contributing Factors
Between July and September 2024, wholesale electricity prices exceeded $5,000/MWh a staggering 54 times, the second-highest quarterly record since 2008. Key factors included:
Network limitations restricting energy flow between regions.
High demand and low wind output.
Coal plant outages, averaging 3,500 MW during the quarter.
Rebidding Under Scrutiny
The AER observed that rebidding during high-price events often reduced the availability of lower-priced capacity, pushing prices up:
Examples include South Australian batteries and gas plants bidding at or near the market cap ($17,500/MWh) during constrained network conditions.
Rebidding behavior from diverse assets, including batteries like Hornsdale Power Reserve and Lake Bonney, highlights an industry-wide trend.