Cornwall Insight Australia develops 5-minute model for Benchmark Power Curve

Cornwall Insight Australia has developed a 5-minute model for their Benchmark Power Curve (BPC), improving the granularity of their price forecasts from 30 minutes to 5 minutes dispatch for the first five years of the 30-year forecast.

Cornwall Insight Australia’s BPC helps market participants understand trends in future prices and their underlying drivers, enabling them to make informed decisions. In line with the implementation of 5-minute settlement on 1 October 2021, we are pleased to announce that we have developed a 5-minute dispatch model which, as always, is based on the principles of the real NEM dispatch engine.

The National Electricity Market (NEM) has traditionally been dispatched every 5 minutes but settled every 30 minutes, with 30-minute prices being the simple average of the previous six 5-minute periods. This simplification was considered acceptable at the inception of the market, but as the transition continues towards high penetration of Variable Renewable Energy (VRE), it was recognised that aligning dispatch (the physical operation of the system) with settlement (price signals) should lead to more efficient behaviour by market participants including bidding, operational decisions, and investment. This enhancement is particularly beneficial for Battery Storage, VRE, and other market players that have fast rap-up periods such as gas

Shaz Billimoria, Energy Market Modelling Consultant at Cornwall Insight Australia, said:

“30-minute settlement created perverse incentives for generators, leading to all sorts of distorted bidding behaviour. But it also provided a buffer of sorts. If you didn’t generate during a high price early in a 30-minute block, you could play catch-up and ensure you were dispatched later in the 30-minute block, with the high price flowing through to the 30-minute average. 5-minute settlement doesn’t allow for this – no more playing catch-up, no margin for error. We’ve already seen bidding behaviour for large-scale solar adjust since 5-minute settlement went live, with a large reduction in the volume bid at the market floor of $-1,000/MWh.

“Fast and flexible is the name of the game, so we expect assets with those characteristics to benefit, like batteries, some types of gas, and some forms of demand response. 5-minute settlement creates new uncertainties, risks and opportunities – our granular 5-minute forecasts of medium-term price dynamics can help market participants adapt and respond.”

You might also be interested in…

Insight service | Benchmark power curve

The Benchmark Power Curve (BPC) is a comprehensive market and asset-level electricity modelling service. It delivers long-term wholesale power price forecasts informed by industry-leading regulatory, market, and policy experts, and is supplemented with direct access to trusted practitioners.


Webinar | New markets, FCAS, and pathways for storage in the NEM

Register for this free webinar on November 25 covering rule changes relevant to battery storage in the NEM as well as renewable energy zones and access to new markets.

Related thinking

Commercial and market outlook

Australian Power Price Trends to 2041

This report provides captured power price trends for the Queensland energy market (neutral case in line with AEMO's ISP Progressive Change scenario) from 2022 up to 2041 using outputs from Cornwall Insight Australia’s latest NEM Benchmark Power Curve (BPC), published on 26 October 2022. We hope this information is of...

Announcement

Australian FCAS power price trends

This report provides power price trends for the technology enablement as a percentage of total market share, using outputs from Cornwall Insight Australia’s latest Frequency Control Ancillary Service (FCAS) price curves, published on 30 August 2022. We hope this information is of value-add to you and your business. Please don't...

Low carbon generation

What’s in store? Our analysis of the co-location development pipeline

Amid underlying volatility in wholesale power prices, opportunities for access to wider flexibility revenue streams, and the impact of price cannibalisation, the case for co-location for renewable energy assets is growing. As part of Cornwall Insight’s Renewables Pipeline Tracker service, a case study is included in each report’s release based...

Commercial and market outlook

Capacity, reform, and unlawful strategies: 5 things that happened yesterday

Capacity, reform, and unlawful strategies: yesterday was a busy day for energy geekery. The developments encapsulate the shorter and longer term challenges and uncertainties present in the energy market presently: Read the full article here

Commercial and market outlook

Two thirds of energy industry professionals think the market needs to be drastically reformed

A survey conducted of over one hundred leading energy market professionals from across the investment and advisory community, by Cornwall Insight, from the attendees of its Financing Net Zero forum, has shown nearly two thirds (63%) of people working in the energy industry1 believe the UK market needs to be...

Low carbon generation

A collection of resources on net zero – Net Zero Week 2022

For Net Zero Week 2022, we released a range of resources to help you on your journey to net zero. For convenience, we have put them all together in a handy Resource Report. To read the full collection of resources, please log in to your account or sign up for...

Energy storage and flexibility

Five key trends from the flexible asset PPA market

On 20 May, we published our sixth edition of our Flexible Asset PPA Market report. This is our biannual survey and analysis of the Power Purchase Agreement (PPA) market for flexible assets in GB, seeking to understand the market size, active offtakers and optimisers in the space, latest market trends,...

Home supply and services

Windfall taxes are not the only solution to the energy crisis

The energy market is in a state of transition, with geopolitical concerns threatening to undermine energy security and subsequent wholesale energy rises pushing up bills. It is inevitable that policymakers will look at how best to deliver an affordable energy system for consumers. The temporary, targeted energy profits levy, or...