Australia’s energy landscape is changing
Over the past few years, almost every aspect of the Australian energy market has changed, from sources of generation to methods of distribution and patterns of consumption.
We are part of that change, and we can expect the landscape to continue to change for some time yet. Often it might happen in fits and spurts, rather than being steady and predictable.
By joining Members Energy, you have taken a proactive step and invested in the future of energy. Together, we are helping to shape the future of the Australian energy market.
You’re part of the spot market
Members Energy trades the excess electricity you generate or store in your battery on the energy spot market. Our goal is to do so at optimal times to maximise returns.
However, the spot market does fluctuate significantly. Because we don’t want you to be completely at the mercy of those fluctuations, Members Energy gives certainty over a minimum feed-in tariff of 6 cents (10.2 cents in Victoria).
When the spot market exceeds the minimum feed-in tariff, Members Energy passes on 100% of the additional revenue to you.
What is the ‘spot market’?
Through the National Electricity Market (NEM), generators are paid for the electricity they produce by retailers, who are paying for the electricity their customers consume. As a ‘spot’ market, supply and demand are matched instantaneously.
The Australian Energy Market Operator (AEMO) coordinates this process, always working to ensure that supply meets demand. This is vital to the stability of the grid. The physical and financial markets for electricity are interlinked and underpinned by complex information technology systems.
The systems balance supply with demand in real time, select which generators are dispatched, determine the spot price and, in doing so, facilitate the financial settlement of the physical market. All this is done to deliver electricity safely and reliably.
How the spot market works
The spot market fluctuates throughout the day, driven by demand. Spot prices are generally highest between 4 and 7pm, as solar generation slows and demand on the grid increases.
On hot days (>30 degrees), consumers are also trying to cool their homes so demand increases. This is when spot prices tend to exceed 20 cents, going as high as $2.00.
Energy markets generally see extended periods of relatively low prices interrupted by spike events with very high prices. It’s in these short bursts of half hours or hours that more revenue is generated.
This is part of the changing landscape
This summer we experienced fewer days of extreme heat, with their corresponding high peak demand for electricity. When combined with restricted operations by commercial and industrial users due to COVID, the demand on the grid has been lower than expected.
At the same time, we have experienced what are known as negative price events. Negative prices, unheard of until recently, have become quite common in some states as excessive solar generation creates situations where customers are paid to consume.
It is expected that this trend will continue, therefore we are investigating what the benefits would be for our members if we are able to offer ‘spot both ways’ and take advantage of this negative pricing.
Summer 2019-20 to 2020-21 comparison
While it seems like more than a year ago, you might recall that the summer of 2019-2020 was one of the hottest and driest on record. This saw an increase in energy consumption, resulting in the spot marketing peaking at $14.70 kWh in some states.
However, following on from the many challenges of the past 12 months, we had a far cooler summer. This resulted in lower trading events than previous years.
As you can see in this table, maximum spot prices have been significantly different from one summer to the next:
What does the future hold?
Climate change, the number and frequency of extreme weather events, peak temperatures, population growth and concentration, improvements in technology (commercially and domestically), and the penetration of rooftop solar all play a role in fluctuations in demand on the grid and, thereby, the spot market.
While spot prices might be lower than previously seen over summer, we could see a shift in demand through winter. As our fleet of batteries grows, so does our ability to raise other revenue through Frequency Control Ancillary Services (FCAS), grid stabilisation, peer-to-peer trading, and other similar projects that will be available through distributors.
Currently, our fleet of over 2000 customers has the capability to deliver over 6MWh into the grid. As we continue to grow our membership and combined capacity, you will continue to be in a position to generate revenue, not only through spot pricing.
You can be assured that, by being able to control your solar and battery, your system will continue to learn through intelligent control and optimisation, and Member’s Energy will continue to deliver value back to you.