Analysis of Historical Spot Prices for the Australian

National Energy Market, Growing Concerns about

Negative Prices & Postulations on Energy Storage
Peter J. Wolfs
Robert P. P. McKone
School of Engineering & Technology
School of Engineering & Technology
CQUniversity
CQUniversity
2019 29th Australasian Universities Power Engineering Conference (AUPEC) 978-1-7281-5043-7/20/$31.00 ©2020 IEEE 10.1109/AUPEC48547.2019.211966

Rockhampton, Australia
Rockhampton, Australia
p.wolfs@cqu.edu.au
robert.mckone@cqumail.com

Abstract—The National Energy Market (NEM) for Australia

has evolved since its birth in 1998. Major milestones have been
the introduction of Tasmania in 2005 to the NEM, the
introduction of the Clean Energy Act 2011 in 2012 and its repeal
in 2014. While these milestones are important and visually
striking, there is a growing trend of negative wholesale prices
for electricity, both in isolated regional events, or
simultaneously across all regions of the NEM. The steady
penetration of rooftop intermittent solar and other distributed
energy generation systems is noticeably influencing market
pricing. Australian Energy Market Operator (AEMO) data is
used to visualise this, and postulations are drawn about the
possibility for storing energy in battery technologies for
environmental and economic gains without needing any price
forecasting methods. Open data from AEMO is used to show
this.
Keywords— Energy Market, Open Data, Australia, Carbon
Tax, Negative Electricity Prices.
I. INTRODUCTION
High levels of private investment in renewable energy
systems, by households with roof top solar and by
corporations with large scale wind and solar farms, is
transforming the Australian energy industry. Storage is often
proposed to provide firming for intermittent renewables. This
storage could be implemented by large hydropower systems
such as Snowy 2.0 or the Battery of the Nation [1-2].
Alternatively, there are IoT approaches to build Virtual Power
Plants (VPPs) [2-5] which incorporate distributed storage.
This paper attempts to stimulate conversation using visual
tools and to quantify some opportunities for storage and
energy trading in the National Energy Market (NEM).
The NEM for Australia supplies around 9,000,000
customers over 40,000 km of transmission lines and cables for
the region-states of Queensland, New South Wales (incl. the
Australian Capital Territory), South Australia, Victoria and
Tasmania, but not Western Australia and the Northern
Territory [6]. A map shows the region-states in Fig. 1 which
is a total area of land approximately 3.8∙106 km2 [6]. The
NEM has been operating since December 1998 for all
previously listed region-states, except TAS which entered the
NEM in May 2005, and the Basslink interconnection was
commissioned in April 2006 [7]. With such a large energy
market geographically and the increasing penetration of
renewable energy such as rooftop solar, there are many
stakeholders who have vested interests that the market
performs in a way to not be detrimental.
Fig. 1. Map of the Australian Region-states in the NEM
Negative wholesale prices across the NEM can be an
opportunity to take advantage of with battery storage, but
within a finite bound both instantaneously for load size, and
duration. Generally and historically, region-states with
smaller loads are more likely to have experienced negative
prices than larger region-states. This means that while there
are more times at which negative prices have been present,
they are experienced in region-states which cannot supply
larger loads/battery storage systems.
Politically, between 2012 and 2014 there was an increase
in the wholesale electricity price due to the Carbon Pricing
Scheme [10]. While negative prices might seem tempting for
large-scale battery farm investors, they might see their
potential risk being that of competition, but they must also be
careful of changing political policy from the government. No
argument is being made for or against putting a price on
carbon environmentally but doing so made a highly noticeable
change in the Australian Energy Market.
II. HISTORICAL PRICE & DEMAND DATA
A. Overview of Region-states & Non-stringent Price-
ceilings
Sourced from the Australia Energy Market Operator
(AEMO), historical NEM data [8] show the half-hourly spot
prices over the five region-states for the Regional Reference
Price (RRP) in AUD vs. Total Demand in MWh. These spot
prices vary between regions, time and total demand. A scatter
plot is created to show data for all NEM region-states except
Tasmania from 2:00 am 7th December 1998 to 12:00 am 1st
September 2019, and 2:00 pm 16th May 2005 to the same end
time in Fig. 2 to Fig. 6 plotted for only a RRP of -$200 to
$600. For this dataset, there are 1,704,529 half-hourly
datapoints, and because of this size, plotting all region-states
in one figure would crowd the plot, resulting in not showing
all the datapoints as some would be hidden behind others.

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Fig. 2. Queensland – Scatter Plot of all Historic NEM Region-state
Total Demand vs Wholesale Regional Retail Price
Fig. 3. New South Wales & the Australian Capital Territory –
Scatter Plot of all Historic NEM Region-state Total Demand vs
Wholesale Regional Retail Price
Fig. 4. Victoria – Scatter Plot of all Historic NEM Region-state
Total Demand vs Wholesale Regional Retail Price
Fig. 5. South Australia – Scatter Plot of all Historic NEM Region-
state Total Demand vs Wholesale Regional Retail Price
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Fig. 6. Tasmania – Scatter Plot of all Historic NEM Region-state
Total Demand vs Wholesale Regional Retail Price
Looking at Fig. 2 to Fig. 6 shows a basic visual fact that the
higher the demand, the less likely the RRP will be negative,
and vice versa. However, it is not true to say that total demand
can accurately predict the wholesale RRP.
Another feature of interest that is clear particularly in the
NSW (ACT) and VIC data, but present to some degree
throughout all region-states, is the ‘non-stringent price-
ceiling’ [9] of $300.
B. The Australian Carbon Price Scheme
Between 2012 and 2014 Australia had a carbon pricing
scheme under the ‘Clean Energy Act 2011’ [10] which
noticeably altered the NEM. This is obvious when comparing
full year data from each region against each other. Fig. 7
shows full year data for only QLD from 1999 to 2018 as a
density histogram. Other region-states show similar data,
different, but similar enough for Queensland to be
representative.
It can be seen that there is a clear distinction for the RRP
within and between 2012 and 2014 where the scheme came
into effect on the 1st of July 2012 and officially abolished on
the 17th of July 2014 but backdated to the 1st of July 2014 [10].
This visible gap in prices can be seen to be approximately $20
to $25, with an increase in price in 2012, and a reduction in
price in 2014.
C. Negative Wholesale Prices
Across all NEM region-states there is an abundance of
negative prices [8], except for NSW, as shown from Fig. 8 to
Fig. 12. TAS has partial data for 2005 and 2019, and the rest
of the region-states have partial data for 1998 and 2019.
Performing a linear regression analysis on the data for all
region-states except for NSW gives Fig. 13 where the linear
model has been normalised around the year 2018. This shows
that while they have different demand sizes, that QLD and
TAS currently share a historical linear regression, while so do
SA and VIC. NSW is a small sample size. While it has not
been shown, performing the same linear regression on NSW
would suggest a slight reduction in the negative price
occurrences, but this does not consider 2019.
Fig. 7. Queensland – Density Histogram of Demand (MWh) vs. RRP ($) from 1999 to 2018

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 Fig. 8. Queensland – Count of Negative Wholesale Regional Fig. 11. South Australia – Count of Negative Wholesale Regional
Retail Price Retail Price

Fig. 9. New South Wales & the Australian Capital Territory – Fig. 12. Tasmania – Count of Negative Wholesale Regional Retail
Count of Negative Wholesale Regional Retail Price Price

prices that are primarily not consecutive with each other,

while QLD, SA and TAS have had periods of time where
negative prices have been prolonged. As seen in the data, the
region-states that experience the most consecutive negative
RRP events are TAS, SA, VIC, QLD and then finally NSW.
This seems to be in line with each region-states load size, with
QLD and VIC being quite close together historically.
The consecutive negative RRP events in SA and TAS for
16 or more half-hourly periods (eight or more hours) have
occurred twelve times historically, with three 19 consecutive
half-hourly period events occurring in TAS [8]. The three 19
period events occurred in the 2nd of October 2009, the 20th of
August 2011 and the 28th of January 2014, where the first two
events were small, with the first 19 event having a RRP of
about -$1 to $10, the second -$0.40 to -$20, but the third $-89
Fig. 10. Victoria – Count of Negative Wholesale Regional Retail
Price

While the number of times that negative prices are

occurring are increasing for the four previously stated region-
states [8], it is also important to look at the prices when these
occur. Looking at all historical data, some more trends can be
seen in Fig. 14.
Single occurrences of negative prices are historically more
common [8] than consecutive and prolonged periods of time.
Table 1 shows a tally for consecutive negative wholesale
prices for each region-state first for the whole of 2018 and
January through August for 2019 vs all historical data as the
second number. NSW and VIC are shown to have negative
Fig. 13. Normalised NEM Trend of Regional Retail Prices

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 QLD NSW VIC SA TAS
07/02/2009
-$108.09 -$106.15 -$255.67 -$301.83 -$249.85
10:00 pm
16/08/2009
-$0.02 -$0.02 -$0.02 -$0.02 -$0.03
4:00 am
16/08/2009
-$0.01 -$0.01 -$0.03 -$0.04 -$0.17
4:30 am
16/08/2009
-$0.31 -$0.32 -$0.29 -$0.29 -$0.29
5:00 am
27/09/2010
-$0.04 -$0.05 -$0.04 -$0.04 -$0.05
3:30 am
27/09/2010
-$0.04 -$0.05 -$0.04 -$0.04 -$0.05
4:00 am
Fig. 14. Point Density Chart of Negative Wholesale Regional Retail 24/08/2019
-$25.64 -$9.51 -$8.34 -$116.88 -$7.87
Price for all Region-states Historically 11:00 am
Table 2. Concurrent Negative RRP Events Historically in the NEM
to -$215. While regionally significant prolonged events have
not increased in frequency for 2018 and 2019 in NSW, SA and introduction of TAS into the NEM). The first event on the 2nd
TAS, they have done so in QLD and VIC. QLD has seen a of February 2009 is the day of the Black Saturday Bushfires
significant increase in such events in the past two years, with which were large bushfires in VIC and NSW [11], with a royal
24.1% of all grouped events occurring in this timespan, and commission investigating the matter titled the ‘2009 Victorian
33.9% for all half-hourly periods. For the NEM in this same Bushfires Royal Commission’ (2009 VBRC) [12]. No known
time the statistics are 28.4% and 29.0% respectively. In less reason can be found for the three consecutive but small
than two years (twenty months), the amount of negative RRP negative RRP events between 4:00 am and 5:00 am on the 16th
events both as consecutive events and as half-hourly periods of August 2019, same with the two consecutive events on the
has increased. 27th of September 2010 between 3:30 am and 4:00 am.
Concurrent negative RRP events between all region-states However, on the 24th of August 2019 there was a trip in the
at once however is not as common. For all historical data, Basslink interconnector between the Australian mainland and
there have been seven instances of there being negative RRP TAS [12] which could have been mitigated with a duplicate
across all region-states at the same time. Four in 2009, two in interconnection like in the proposed Marinus Link project [2].
2010 and one in 2019. The data for these events can be seen While other concurrent negative prices have occurred between
in Table 2. There were no concurrent events with the region- some region-states, the two biggest events have been due to
states QLD, NSW (ACT), VIC and SA before 2005 (the severe events, a large bushfire, and the loss of an
interconnection between the mainland NEM and Tasmania.
QLD NSW VIC SA TAS Total
1 23/122 2/12 34/144 130/410 83/276 272/964
III. CLOSING REMARKS & POSTULATIONS
2 8/23 0/2 9/28 33/155 35/120 85/328 While there is an increase in frequency of negative RRP
events across most of the NEM, these are typically regional,
3 1/7 0/1 3/16 13/60 19/51 36/135
and a robust price forecasting method may be required. NSW
4 3/3 0/4 11/36 12/41 26/84 is particularly limited in the numbers of negative RRP events,
5 1/3 0/3 10/26 7/21 18/53 but the smaller SA and TAS region-states might seem to be
6 0/1 0/1 3/5 7/21 4/15 14/43 more profitable. However, considering their small load size,
these region-states will only provide limited opportunities for
7 1/1 2/4 5/14 7/14 15/33
the total energy exchanged. The negative price events are
8 1/1 1/3 2/14 3/10 7/28 sensitive to load demand and relatively small purchases may
9 1/1 1/2 3/5 3/10 8/18 significantly alter prices.
10 0/4 1/9 4/8 5/21 While it is still possible to theoretically perform load
11 2/4 0/2 2/6 shifting within a region-state, this would be hoping for a
12 3/7 4/11 7/18 substantial increase in the wholesale RRP. Negative RRP
might guarantee a profit before considering operational costs
13 1/1 0/1 1/2
in most instances, but long and sustained negative prices of
14 0/1 0/1 RRP are sometimes dangerous events for short-term profits.
15 0/3 0/4 0/7 These events seem to be decreasing more recently in NSW,
16 1/1 0/2 1/3 VIC, SA and TAS. QLD has seen their longest events occur
in the past two years. A speculative hypothesis for the
17 0/2 0/1 0/3
increase in duration in QLD relates to the nature of new
18 0/1 1/3 1/4 generation from solar farms. Solar farms have nearly zero
19 0/3 0/3 operational costs and can derive income from ‘large-scale
Total 39/162 2/16 53/213 222/770 182/593 498/1754
generation certificates’ (LGCs). On sunny/light-load days,
such as found in autumn or spring, solar farms can generate
Table 1. January 2018 through August 2019 vs. Historical
Consecutive Negative RRP Tally
for many hours around noon into moderately negative market
prices.

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 The historical record shows that events like the Black
Saturday Bushfires and the loss of the Basslink
interconnection were highly profitable. In some instances,
ethical questions may arise if trading produces profits from a
disaster. While the bushfire was a devastating event, the
Basslink interconnection has a proposed path for
improvement with the Marinus Link project. No individual
project or projects are currently proposed that would have seen
the prevention of the bushfire. Aging electricity assets were
mentioned in the 2009 VBRC [12] as the cause for some of
the fires started during the event, with it stating that while it is
not possible to eliminate the risk posed by electrical assets
completely, that investment in improving them is needed. Not
all solutions will be to build battery farms, and with correct
asset planning, it would actually see a reduction in the amount
of negative events.
The data shows negative price events are becoming more
frequent. Renewable generation have low operating costs and
derive some income from large-scale generation certificates.
These generators can operate at low or slightly negative
prices. It is predicted that with increasing negative prices, the
negative prices will be large enough to increasingly require
these generators to be turned off.
There are arguments for intervention into energy markets
to reduce the frequency of low and negative prices. In regions
with high levels of renewable generation, negative prices
effectively curtail new renewable energy investments. New
wind investments in SA or new solar investments in QLD are
adversely affected by the near certainty of low prices when
wind and solar resources are plentiful. Low and negative
prices also hasten the exit of less flexible generation,
especially coal generation, and this can have unfavourable
market effects in the short to medium term. Storage can play
a role in reducing price volatility through energy arbitrage.
Pumped hydro storage schemes may be a good option.
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