Tasmanian Market Watch - Reader guide and glossary


Tasmanian Market Watch contains electricity market information that requires the reader to have a basic level of knowledge of the national electricity market and its operations.

This Guide provides definitions of commonly used terms and an overview of the data and charts used in the weekly bulletin. Where possible, links have been provided to websites where a more detailed description of terms and concepts are available.

Please contact the Office if you have any feedback or suggestions.

Units of Measurement
kWh kilowatt hour (one kW used continuously for one hour)
MWh megawatt hour (1 = one thousand kWh)
GWh gigawatt hour (1 = one thousand MWh or one million kWh)

Market Watch Reader Guide

Market Watch Glossary

TermMeaning
AEMCAustralian Energy Market Commission

AEMC is rule maker and developer for the National Electricity Market and elements of natural gas markets. The National Electricity Rules (NER) govern the operation of the National Electricity Market. The Rules have the force of law, and are made under the National Electricity Law (NEL).

AEMOAustralian Energy Market Operator

AEMO is responsible for the management of the National Electricity Market (NEM) and oversees system security of the NEM electricity grid.

AERAustralian Energy Regulator

The AER regulates the wholesale electricity market and is responsible for the economic regulation of the electricity transmission and distribution networks in the national electricity market (NEM).

AETVAurora Energy Tamar Valley Power Plant
BasslinkBasslink is an electricity interconnector that allows electricity to be traded between Tasmania and the National Electricity Market (Victoria). It is rated to export 500 MW (from Tasmania) and import 480 MW (to Tasmania) on a continuous basis and export up to 630 MW from Tasmania for limited periods.

Basslink operates as a market networks service provider (MNSP) in the NEM. Basslink imports (negative flow) are when electricity flow is from Victoria to Tasmania. Exports (positive flow) is when electricity flow over Basslink is from Tasmania to Victoria.

The direction of electricity flow across Basslink is dependent both on energy prices and frequency control ancillary service (FCAS) prices. Periods of counter price flows (ie when energy prices in Tasmania are below that in Victoria, and Basslink continues to import power from Victoria (and vice versa)) arise because of the co-optimisation of energy and FCAS spot markets by the NEM dispatch engine (NEMDE).

Basslink is also able to transfer FCAS. Basslink is deemed to be unable to transfer FCAS services while flow is between approximately -50 MW and +50 MW. This is Basslink's 'no-go zone'.

Counter price flowNegative price differences occur when electricity flows from a higher-priced region to a lower-priced region in the NEM.
FCASFrequency Control Ancillary Services

FCAS are used by AEMO to maintain the frequency on the electrical system, at any point in time, close to fifty cycles per second (50Hz) as required by the NEM frequency standards. There are two regulation services - Raise and Lower (which raise or lower the Frequency) and 6 contingency services:

  • Fast Raise and Fast Lower (six second response to arrest the immediate frequency deviation)
  • Slow Raise and Slow Lower (sixty second response to keep the frequency within the single contingency band); and
  • Delayed Raise and Delayed Lower (five minute response to return the frequency to the Normal Operating Band)

Regulation services are continually used to correct for minor changes in the demand/supply balance. However, contingency services, while always enabled to cover contingent events, are only occasionally used.

Raise contingency FCAS are required to be available to correct the frequency excursions that have arisen from a credible contingency event that leads to a decrease in frequency. As these contingency events usually involve step reductions in supply, the Electricity Rules stipulate that generators pay for these services.

Lower contingency FCAS are the services required to be available to correct the frequency excursions that arise from a credible contingency event that leads to an increase in frequency. As these contingency events usually involve step reductions in customer demand, the Electricity Rules stipulate that customers pay for these services.

Tasmania's frequency standards can be found at the Australian Energy Market Commission.

HydroHydro Tasmania

Hydro Tasmania is a Government owned enterprise that is the predominant generator of electricity in Tasmania.

Inter-regional revenueInter-regional revenues (IRRs) arise from the difference between Tasmanian and Victorian spot prices, and can be used to hedge inter-regional price risks. A number of financial products are available to market participants wishing to manage inter-regional risks, such as swaps and caps which provide revenue certainty to both parties involved in the transaction.

Hydro Tasmania is required to provide a semi-annual public report​ on inter-regional trading.

Load factorThe load factor is the ratio of the average load to the peak load (seasonal), and gives an indication of how steady the load is. A low load factor means that there is an occasionally high demand. To service that peak, capacity sits idle for long periods of time and thus imposes higher costs. A high load factor indicates that power usage is constant, resulting in lower costs.
NEMNational Electricity Market

A basic overview of the NEM and AEMO's role in the market is provided in AEMO's booklet An Introduction to Australia's National Electricity Market.

Spot priceWholesale trading in electricity is conducted as a spot market where supply and demand are instantaneously matched in real-time through a centrally-coordinated dispatch process.

A dispatch price is determined every five minutes, and six dispatch prices are averaged every half hour to determine the spot price for each trading interval for each of the regions of the NEM.

There are 48 trading intervals per day and 336 trading intervals (2x24x7) each week. Average spot prices can be calculated based on time (time weighted) or demand (volume weighted).

The spot price is not related to contract prices offered by generators to market participants.

TurnoverTu​rnover in the energy market is the cost of energy supplied to the market.


Market Watch Guide

Week at a glanceData Source
Average price (volume weighted) Weekly average half hour regional spot price (Tasmania), weighted by demandNEM-Review™
Median priceThe half hour spot price in the middle of the range of prices for the week
Average weekly price last yearThe weekly average half hour regional spot price in the preceding year, weighted by demand
NEM average priceThe weekly average half hour spot price of other NEM regions (Victoria, South Australia, New South Wales and Queensland).
% of time price <$50/MWhThe proportion of time during the week when the Tasmanian regional half hour spot price was below $50/MWh (low-moderate price).
Average price - past four weeksChart showing the weekly average (volume weighted) price over the past four weeks
StorageEnergy in storage in Hydro Tasmania's catchments (measured in GWh)Hydro Tasmania
Maximum and minimum DemandThe highest and lowest half hour system demand during the week (MW)NEM-Review™
Average demandThe mathematical average half hour system demand during the week (MW)
Weekly energy demandSum of weekly half hour demand
Basslink exportThe amount of energy exported over Basslink during the week (GWh)
Basslink importThe amount of energy imported over Basslink during the week (GWh)
% time counter price flowThe proportion of time when there was a negative price difference (counter price flow) between Tasmania and Victoria during Basslink flow.
Basslink import/export - past four weeksChart showing the amount of energy imported/exported over Basslink during the week over the past four weeks
Tasmanian demand and Basslink flow during the weekChart showing the half hour energy demand (MW) and how it was met by Tasmanian generation and Basslink. Exports are shown as Tasmanian generation both meeting Tasmanian demand and exporting to the mainland.
Total FCAS costs (Tas)The total cost of frequency control ancillary services for the week in Tasmania. AEMO
Water storage situationData Source
SystemThe total amount of energy in storage as at the beginning of the week, excluding Lake Gardiner, Lake Margaret & Lake Plimsol. This is the value used by Hydro Tasmania, for historical consistency.Hydro Tasmania
NHW (Northern Headwaters)The amount of energy in storage in Hydro Tasmania's smaller Northern Headwaters lakes - Mersey Forth (Lake Mackenzie, Lake Rowallan and Lake Gardiner), King (Lake Burbury), Anthony Pieman (Lake Murchison, Lake Plimsol and Lake Mackintosh) and Yolande (Lake Margaret). Approximately 40 per cent of Tasmania's hydro generation capacity is supplied by the NHW.
Water storage trendsChart showing the system weekly energy in storage over the past five years
Generation
Hydro generationThe amount of energy produced by Hydro Tasmania's scheduled generators during the week, including exportsNEM-Review™
AETV generationThe amount of energy produced by Aurora Energy Tamar Valley Power Station (AETV) generators during the week
Intermittent generationThe amount of energy produced by intermittent generation (semi-scheduled and non-scheduled generators) during the week. Includes non-scheduled hydro generators and wind generation.
Fact Sheet
Market pricesAverage, median, maximum and minimum half hourly spot prices for the week and preceding weekNEM-Review™
Maximum and Minimum weekly average priceThe highest and lowest weekly average price since NEM entry (April 2006).Calculated
DemandMaximum, minimum and average system half hour demand. The date and time of the occurrence of peak and low demands are notedNEM-Review™
Weekly system load factorWeekly half hour system demand compared to weekly peak demandCalculated
Last season average load factorSeasonal load factor for the same time in the preceding yearCalculated
Weekly energy generationTotal Tasmanian electricity generation (Hydro + AETV + Basslink), also shown in a pie chartNEM-Review™
Basslink + AETV shareProportion of Tasmanian demand met by Basslink imports and AETVCalculated
Recorded maximum peak (this year)Maximum peak demand recorded this yearDerived
Recorded maximum peak to dateMaximum peak demand recorded to dateDerived
Export / ImportTotal weekly import and exports over BasslinkNEM-Review™
Maximum flowPeak flow (MW) during import and export during the week
Inter-regional revenue generatedCalculated inter-regional revenue during Basslink import and export. Price difference Tas-Vic x flow over Basslink during import and export. Losses are not considered in the calculation of revenues.
Maximum positive and negative price differential observed during imports/exportsHighest positive and highest negative price difference between Tasmania and Victoria during Basslink flow.
Number of intervals counter price flowNumber of half hour trading intervals when there was a negative price difference between Tasmanian and Victorian regions. This indicates the proportion of time during the week when Basslink flow direction ran counter to the price difference between Victorian and Tasmanian regions.
% time of counter price flowThe number of half hour trading intervals of negative price differences, as a proportion of time in the week
No-go zone flows (% of total MWh flows)The proportion of Basslink flows that were between 50 MW and -50 MW.
Frequency control ancillary service (FCAS) costsData Source
Total FCAS costsTotal weekly cost of FCAS in Tasmania and rest of NEM. AEMO
% total energy costsThe cost of FCAS as a proportion of total energy costs (energy turnover)
Cost of Lower servicesTotal weekly cost of Lower FCAS services in Tasmania and rest of NEM
% total energy costsThe cost of Lower FCAS as a proportion of energy turnover
Cost of Raise servicesTotal weekly cost of Raise FCAS services in Tasmania and rest of NEM
% total energy costsThe cost of Raise FCAS as a proportion of energy turnover
Price spikes in Tasmania
Price spikesThe number of times the half hour spot price in Tasmania was more than three times the weekly average price (ie considered to be significantly higher than average)Calculated
Demand and price profiles of the week - TasmaniaChart showing the half hour demand and spot price in Tasmania over the weekNEM-Review™
Other market news and trendsData source
Average spot pricesComments on the weekly average spot prices across the NEM including the highest and lowest weekly averagesCalculated
Market turnoverTotal turnover in the energy market (NEM) for the week ($millions), calculated from half hour price and demand data in each region.Calculated
FCAS costsTotal cost of FCAS in the NEM, as a proportion of total energy market turnover. Tasmanian contribution to FCAS costs as a percentage of total FCAS costs in the NEM.AEMO
Price distribution within the week - TasmaniaChart showing the percentage of time that spot prices were within a range of price bands during the weekCalculated
Weekly average prices in the NEMChart showing the weekly average (volume weighted) spot price in each region for the week, compared to the preceding weekCalculated
Market snapshotChanges every week. This section often includes other data and information for the week or year, or a series of weeks or years.Various sources
Rainfall mapTasmanian rainfall information, overlayed with a map of hydro catchment areas.Bureau of Meteorology
Wholesale Electricity Market Contract RegulationData source
Approved financial contract offer prices for relevant NEM weekGraph shows contract prices for the next six calendar year quarters for the four regulated contract products. More information on wholesale price regulation is provided on the Office of the Tasmanian Economic Regulator's Website.Hydro Tasmania
Purpose of Traffic Light IndicatorsHydro Tasmania is required to ensure that for each quarter there is a sufficient volume of regulated contracts to meet the small customer load in Tasmania. The minimum volume of regulated contracts required to meet the small customer load is referred to as the "Absolute Minimum Offer Volume" with separate amounts for capacity (MW) and energy (GWh).

The traffic light indicators were developed to advise market participants of the availability of regulated contracts in each of the eight forward quarters in which Hydro Tasmania is required to offer regulated contracts.

The availability of regulated contracts in each quarter depends on:
  • forecast Tasmanian demand;
  • total volume of contracts sold; and
  • the remaining Absolute Minimum Offer Volume.

As the volume of existing contracts sold can vary in terms of capacity and energy the traffic light indicators for capacity and energy can be different colours in any given week.

Green light

Where the difference between the volume of contracts sold by Hydro Tasmanian and forecast Tasmanian demand is above a certain level Hydro Tasmania is required to increase the volume of regulated contracts offered. Therefore Hydro Tasmania is required to offer the Absolute Minimum Offer Volume plus a "Supplementary Offer"*.

Red light

Where the difference between the volume of contracts sold by Hydro Tasmanian and forecast Tasmanian demand is less than or is equal to zero Hydro Tasmania is still required to offer the Absolute Minimum Offer Volume.

Amber light

Where the difference between the volume of contracts sold by Hydro Tasmanian and forecast Tasmanian demand is above zero but below the green light level, Hydro Tasmania is required to increase the volume of regulated contracts available but the increase is less than that required for green light conditions. Therefore Hydro Tasmania is required to offer the Absolute Minimum Offer Volume plus a "Reduced Supplementary Offer"*.

To ensure market participants are provided with sufficient notice of a reduction in the volume of regulated contracts available Hydro Tasmania must maintain amber light conditions for 13 weeks before changing to red light conditions.

* Defined in clause 28 of the Wholesale Contract Regulatory Instrument.
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