Spring heatwave and coal outages deliver $2 million payday for home battery owners
On Monday evening this week, self-styled home battery boffins were buzzing with excitement on Reddit.
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boffins → deliver → Reddit
Deep in niche threads, they shared screenshots and boasted about how much money they'd made that afternoon on the National Energy Market (NEM).
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they → share → Market
Electricity prices in New South Wales had suddenly skyrocketed around 3:30pm (AEDT), peaking at $23,107 per megawatt hour (MWh), just shy of the market cap.
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prices → skyrocket → cap
Prices exceeded $5,000/MWh in 11 separate five-minute intervals.
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Prices → exceed → intervals
"Rolling power spike pricing, have made $100 in an hour selling 30kw/h," one Reddit user commented.
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user → roll → 30kw
"Solid effort!!," replied another.
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another → reply → ?
A spring heat wave was sweeping the state, pushing temperatures into the mid-30s.
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wave → sweep → mid-30s
At Observatory Hill in Sydney, temperatures spiked at 34.7 degrees, more than 12 degrees above the long-term monthly average.
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temperatures → spike → average
For people with solar panels on their roofs and batteries in their garage, it was a chance to make money selling power back to the grid at much higher rates.
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it → make → rates
"Hot day shenanigans," another Reddit user posted under another earnings screenshot.
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user → post → screenshot
Green Energy Markets CEO Tristan Edis said the price spike was a reminder of an underlying NEM vulnerability in a rapidly warming climate as it tried to manage aging coal plants while building generation and storage.
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it → say → generation
"It's normal for electricity prices to be high when temperatures go noticeably above 30 degrees," Edis said.
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Edis → go → degrees
"What's problematic is that doesn't normally happen in October.
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that → happen → October
What happened?
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What → happen → ?
Fuelling the extraordinary spike in prices was a confluence of factors.
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confluence → fuel → factors
As temperatures climbed, four of NSW's 12 coal-fired generating units were out of action and two were at reduced capacity.
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two → climb → capacity
To make matters worse, several high transmission lines were also running below capacity due to maintenance, meaning huge amounts of mostly renewable energy and storage capacity could not be delivered to Sydney just when it needed it most.
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it → make → it
Australian energy intelligence firm GridScout said the energy was instead curtailed, or shut off at the source, because the high-voltage network could not transport more electricity.
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network → say → electricity
"Technical curtailment peaked at (2,800 megawatts), with renewables and batteries in Southern NSW being the most heavily affected," the firm noted on social media.
"This was all while prices were above $10,000/MWh.
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prices → peak → 10,000
"
So hot temperatures drove up demand just when less electricity was available.
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electricity → drive → demand
Amid the chaos, market watchers were also stunned by an unusual phenomenon.
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watchers → stun → phenomenon
Just after 3pm AEDT as demand soared, NSW spot prices on the wholesale market started whipsawing dramatically.
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prices → soar → market
They jumped from about $200/MWh to more than $1,300/MWh, hit the $23,000 market ceiling minutes later, then plunged again.
And so it went for another hour.
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it → jump → hour
$2m payday for batteries and EVs
Dave Smith, a wholesale power market designer, said the wild price gyrations appeared to have been driven by a new force in energy – Australia's growing fleet of household batteries.
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gyrations → say → batteries
On the national energy grid, bids are placed every five minutes for the next five minutes of power.
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bids → place → power
The cheapest bid wins, and everyone who contributes gets paid at that price.
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who → win → price
According to Smith, the squeeze in NSW on Monday drew a predictable response from the market.
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squeeze → accord → market
Prices rose sharply as supplies struggled to keep pace with demand.
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supplies → rise → demand
Among those responding were the legions of household battery owners with software that allows them to control their batteries, all getting alerts on their phones telling them to sell their surplus power to tap into soaring prices.
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all → respond → prices
But unlike most providers, these batteries sit behind the household meter, meaning the market operator has no ability to control them.
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operator → sit → them
When prices spiked on Monday, household batteries injected large amounts of power into the system, only to pull back when prices fell in the next five-minute interval.
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prices → spike → interval
At all times, Smith said, AEMO was on the back foot and playing catch-up.
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AEMO → say → up
"Everyone sees that, 'Oh, the spot price is very high'," Smith explained.
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Smith → see → ?
"And some people with home batteries who are seeing that price are saying, 'Oh, it's a great opportunity, I can discharge my battery for five minutes'.
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I → see → minutes
You can make a lot of money."
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You → make → money
Dan Adams, co-CEO of Amber Electric, an online energy retailer that connects and enables battery owners to trade on the NEM, said revenue on Monday was "probably" a record.
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revenue → connect → Monday
"Those 30,000 customers made $2 million in the space of two hours,"he said.
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customers → make → hours,"he
"So $69 each on average, and the top earners made over $500.
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earners → make → 500
While $23,000/MWh sounds like a lot to pay for power, Adams said spiking like this is normal and how the market is designed to work.
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market → sound → this
In the past, he said, only gas-fired generators would have been able to meet such demand peaks, but not anymore.
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generators → say → peaks
…and 31 more, not listed.
The Aporia