It’s negative wholesale price season again

Last Saturday on the 4th of July Queensland celebrated the continued growth of solar PV in the state with a whole day of negative spot wholesale prices.

From 9am until 3pm prices wholesale electricity prices plunged in the mild, sunny conditions. Too warm for cooling, too cool for heating. With clear skies all day the state’s utility and rooftop solar panels were operating at maximum output, even though demand was low.

Most retailers and industrial customers had already contracted their supply from the state’s coal fired power stations, and after surplus power was dispatched into NSW the remnant oversupply pushed wholesale spot prices into negative territory.

Of course it’s hardly the first time. As the team at WattClarity pointed out in a recent blog late winter is now negative price season in Queensland, a new cyclical risk to manage in the increasingly volatile wholesale market.

Frequency of negative price half-hourly events in Queensland spot wholesale market by month 2019-20

Mild sunny conditions are more frequent from now until September, and as the scale of solar PV continues to increase the effect of soft demand and rising generation will continue. the transfer of the Wivenhoe pumped hydro facility from CS Energy to the new renewables focussed CleanCo doesn’t appear to have ameliorated the impact much.

In these conditions those large scale solar generators who do not have guaranteed price contracts with the Queensland Government will switch off, at least once the price falls below the value of the Large scale renewable energy certificates they might earn.

Rooftop generation is completely indifferent to price as it is competing with the smoothed retail price of electricity, and in any case because nobody thought of installing technology to be able to switch them off or down under these conditions.

There is no sought of a renewables slow down in Queensland. CleanCo is still continuing to develop new renewable capacity behind the state governments Renewables 400 program, while rooftop solar installation rates are tracking to adding another 2.7GW nationally, led by Queensland and NSW.

South Australia remains the national capital of negative pricing with more than 50 per cent wind and solar generation and constrained transmission into Victoria. Its negative price events are more stochastic, as they are driven more by surges in wind generation than the more predictable cycle of solar.

South Australia wholesale market July 2019-20

They also report increased negative price events in the late winter and early spring, although this is driven both by sunny weekends and by the seasonal wind pattern of strong early morning winds from July through to November.

The increased frequency and intensity of these events can be expected to flow through to the balance sheets of renewable projects taking the spot price, which is most of them.