National Electricity Market
From Wikipedia, the free encyclopedia
The National Electricity Market (NEM) is the name of the Australian electricity distribution grid and wholesale electricity market. The NEM began operation in December 1998, and operations are currently based in six interconnected regions - Queensland, Victoria, South Australia, New South Wales, the Snowy Mountains region (including the Australian Capital Territory and parts of New South Wales), and Tasmania. Tasmania joined the NEM as a sixth region in May 2005 and became fully operational on 29 April 2006 when the Basslink interconnector was fully activated.
The NEM operates on the world’s longest interconnected power system with an end-to-end distance of more than 4000 kilometres. Up to AU $7 billion of electricity is traded annually in the NEM to meet the demand of almost eight million end-use consumers.
[edit] Operation Of The NEM
Exchange between electricity producers and electricity consumers is facilitated through a spot market where the output from all generators is aggregated and instantaneously scheduled to meet demand through a centrally-coordinated dispatch process. This process is operated by NEMMCO, the market and system operator of the National Electricity Market in Australia. NEMMCO manages the market according to the provisions of Australian National Electricity Law and Australian National Electricity Rules.
Scheduled generators submit offers every five minutes of every day. From all offers submitted, NEMMCO’s systems determine the generators required to produce electricity based on the principle of meeting prevailing demand in the most cost-efficient way (See also Economic dispatch). NEMMCO then dispatches these generators into production.
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. NEMMCO uses the spot price as the basis for the settlement of financial transactions for all energy traded in the NEM.
The Rules set a maximum spot price of $10,000 per megawatt hour. This is the maximum price at which generators can bid into the market. The maximum spot price is also called Value of lost load (VoLL), and it is the price automatically triggered when NEMMCO directs network service providers to interrupt customer supply in order to keep supply and demand in the system in balanced.
[edit] System Reliability Standards
NEM Reliability standards are established by the Australian Energy Market Commission (AEMC) Reliability Panel. These standards determine that unserved energy per year for each region must not exceed 0.002 percent of the total energy consumed in that region that year. Additionally, the NEM is requried the operate with certain levels of reserve in order to meet the required standard of supply reliability. Under current standards, NEMMCO is required to ensure 850 megawatts of reserve is carried across the entire NEM.
