Wholesale Spot Market | Powerclub
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Wholesale Spot Market

What is the wholesale spot market?

Powerclub provides electricity to you directly from the wholesale spot market. All electricity must go through this market and it is the same market utilised by other retailers to acquire electricity for their customers. Powerclub provides electricity from this market, to you, at a pass-through wholesale cost.

At a wholesale market, prices go up and down a lot. This is why Powerclub created Powerbank to manage the fluctuations, so your bills can be more consistent using our annual forecast price. Our forecast price is based on key forward indicators.

How much do the wholesale spot market prices vary?

For the financial year 2021-22, the regulator sets the maximum price at $15/kWh and the minimum at minus -$1. The maximum price is incremented each year and the minimum is fixed. While there is a new price period every five minutes, creating thousands of price periods a year, in practice most are in a common range.

For 2020-21, wholesale spot price variation resulted in the following mix of prices. History does not dictate the future, and this can’t be used as a guarantee of future outcomes. Every year’s price outcomes will be different, though likely similar.

To keep this in perspective, the 60, 5-minute price spike events above $1 in Victoria equates to a combined period of 5 hours in a year. A single 5-minute spike at $5, being one-twelfth of an hour, for a load like an air conditioner pulling 5kWh would equate to 5kWh / 12 * $5 or $2.08. While a very large increase over normal, when considered across the year, it loses its significance and by utilising Powerwatch, it can often be avoided.

For the 9 to 5 businesses, as shown below, their high usage periods tend to favour the inclusion of more of the smaller spot prices and exclusion of most of, or many of, the large wholesale spot price spikes, making them a natural fit for the wholesale market.

To leverage five-minute spot prices by using or not using appliances at a specific five-minute period, you will require a Smart Meter. Almost all Victorians have a type of smart meter but most members in SA, QLD, NSW, and the ACT only have basic meters. You should be aware of the differences and find out more about Smart Meters.

While there are fewer events in the extremes, the cheaper price periods favour the middle of the day, and price spikes don’t.

Warnings

It is normal for the wholesale market spot prices to be highly variable from one five-minute period to the next. Here are some things you should be aware of.

For the vast majority of the time, spot prices are in the range of 15c/kWh or less. While 15c or even 30c/kWh is much higher than average, they generally happen at common times, like 7am through to 9am in the morning and 6pm through to 8pm in the evening.

Provided you develop good habits around those times by turning off things you are not using and not doing optionally timed tasks involving high consuming appliances, which is typically enough to avoid much of it. Energy-intensive appliances include washing machines, clothes dryers, dishwashers, pool pumps, and other such things. Business energy-intensive devices will be much more diverse.

It is also a good idea to heat and cool as much as reasonably possible outside those periods, for example, do the initial heat/cool just before those times then coast through.

Big Price Spikes

Price spikes above $1/kWh are uncommon, typically less than 1 per 2000 price periods over the year. For many members, energy usage is completely within their control. Powerclub provides Powerwatch to warn you of price spikes so you may act in reducing energy usage at the time of a large price spike. You don’t have to, but for the small number of events greater than $1/kWh (see chart above) it is very rewarding financially to minimise usage during those periods. Failure to do simply means that your Powerbank will incur the cost for that high-priced usage, reducing its balance. If that happens often enough it would lead to a request to top-up your Powerbank.

Big Price Events

These are much rarer again and occur with a regularity measured in years or possibly even decades, but they do happen. These should not be confused with a big price spike that lasts two, three, or four hours which are also rarer but not as impactful. A big price event is one that typically impacts one State the most, lasts for weeks or months, and may contain several big price spikes but also an underlying substantially higher than usual ongoing price.

  • One of these occurred in Tasmania in December 2015 when the Basslink cable connecting it to the mainland failed, taking till June 2016 to fully repair. That combined with a drought limiting State hydro generation capacity, magnified the situation.
  • More recently in May 2021, the Callide Power Station in QLD had a major explosion, destroying one of their large generators and causing the remaining three large generators to also be taken offline. It was not clear when the other generators would be returned to service and after various expectations and extensions, reinstatement of the remaining generators occurred in late July 2021. That combined with a colder than usual winter and early June flooding affecting the output of Yallourn Power Station (20% of Victorian generation capacity) for the month, led to long-running higher prices, especially in Qld and NSW but also having some impact across VIC and SA.

It can be difficult to identify when these events will end. If members become concerned about the size of the impact on their Powerbank and the expected longevity of the event, they should get an early meter read and exit the Powerclub wholesale market. Going forward Powerclub will provide information to members as it gains sound information around such events, to help members make an informed decision on continuing with wholesale pricing.

Monitor your usage and Powerbank balance

You use the Members Portal to check your daily energy use, track wholesale energy spot prices against Powerclub's forecast rate, and monitor changes to your Powerbank balance. If you have solar, your portal records when you're exporting your power generation and the wholesale spot price at that period of time.

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