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Overview of the NEM Spot Market

The National Electricity Market (NEM) operates as a centralized exchange where the Australian Energy Market Operator (AEMO) matches electricity supply and demand in real time.

• Bidding and Dispatch: Generators submit bids indicating the price at which they are willing to supply electricity. AEMO stacks these bids from least to most expensive and dispatches the least-cost mix of generators required to meet demand.
• Five-Minute Settlement: Since October 2021, the NEM settles on a five-minute basis. Generators receive the spot price for their electricity based on each five-minute interval.

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NEM Price Caps and Floors

To manage market volatility and ensure reliability, the NEM enforces the following price limits:

• Price Cap (Maximum): $15,500 per MWh
• Price Floor (Minimum): -$1,000 per MWh

These limits define the maximum and minimum spot prices that can occur during any five-minute interval.

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Market Value Calculation in OpenElectricity

OpenElectricity calculates the market value of electricity generation using the following methodology:

1. For each generator and interval, the value is determined by multiplying the electricity generated by the spot price in the generator’s network region.
2. The total market value for a period is the sum of these values across all intervals and generators.

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Formula

Let:

• g[i, j] = Electricity generated by generator i in interval j (in MWh)
• p[j] = Spot price in the network region for interval j (in $/MWh)
• N = Total number of generators
• M = Total number of intervals

The total market value (V) is calculated as:

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Explanation

• The formula aggregates the contribution of each generator during every interval.
• By summing across all generators and intervals, the total market value reflects the overall economic activity within the NEM.

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Price and Market Data

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Overview

OpenElectricity tracks electricity market prices and trading data across Australian electricity markets, providing detailed price information and market metrics.

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Price Data Structure

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Core Price Components

Price data is stored in the balancing summary table with:

• Interval prices
• Dispatch prices
• Forecast prices

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Market Intervals

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Trading Periods

• NEM:

  • 5-minute dispatch intervals
  • Historical 30-minute trading intervals (pre-Oct 2021)

• WEM:

  • 30-minute trading intervals
  • 30-minute balancing market intervals

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Price Types

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Market Price

The market price is the price at which electricity is traded in the market.

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Market Value

market_value is a volume-weighted price calculated for each generator in each interval and then summed up to the total market value.