Hi SF. I’ll do my best to keep it short and simple. The pricing...

Hi SF. I’ll do my best to keep it short and simple. The pricing is a complex beast. Many analysts employed by power providers to crunch numbers with powerful software to provide the best outcome for their assets. Think SA blackout a few years ago and why available generation wasn’t on line.

Basically we have our big base load power plants contracted to supply a base amount. This is an inflexible component of the power supply. There is some latent spinning reserve provided by these base load stations for any short term system hits. Some generation is contracted to provide frequency control, black start capability etc.

Now in a nutshell, the negative pricing event that happened probably occurred because the base load is running along fine and the renewable supply was pumping. This caused the pricing mechanism to go negative for a short period due to oversupply. Some generators choose to stay on line and take the negative hit so they can stay connected and be available for any short term price spikes/ bidding. This is were the analysts earn their money for their companies.

AEMO site has plenty of public info for consumption. It may explain better than I can.

Here is is something to get your teeth into.

https://www.aemo.com.au/-/media/Files/Stakeholder_Consultation/Consultations/NEM-Consultations/2019/Dispatch/Guide-to-Mis-Pricing-Information.pdf