How to lower the price of electricity

The Australian National Electricity Market is a surprising source of high electricity prices.

For instance, in November 2024, households and businesses in New South Wales used electricity in just ten hours that cost electricity retailers over $672 million. 

All of the electricity used in the other 29 days and 14 hours of November costs retailers less: $615 million. 

The retailers will recoup this cost from their customers via higher retail prices that take effect in one year's time. Note that the higher retail prices will affect all the customers of electricity retailers - even if they did not use any electricity during those ten hours in November when the wholesale cost was so extreme. 

There are some things that can be done to overcome these exorbitant wholesale electricity costs. 

If homes and businesses had energy management systems, these could have a function to reduce electricity consumption from the National Electricity Market in those brief periods that contribute so much to the retail price in the following year. 

The homes and businesses with energy management systems could enter their choices on how to deal with each 5-minute interval where the cost of electricity from the National Energy Market was extreme. 

• If any battery storage was available, the system could be instructed to use stored electricity at those times. 
• If an appliance did not need to run in any five-minute interval, such as a pool pump, it could be instructed to switch off for one or more 5-minute intervals - until it had to be started or the wholesale price had dropped.
  

UPDATE, 1 January 2025

Comparison of Electricity purchased in NSW in November and December 2024

The National Electricity Market data available for the wholesale cost of electricity in NSW in November and December shows: 

• For November, NSW electricity consumers used a total of 5,074,855 megawatt-hours (MWh) for a total cost of $1,337 million. That is $263 per megawatt-hour (MWh).
• For December, NSW electricity consumers used a total of 5,381,036 megawatt-hours (MWh) for a total cost of $886 million. That is $165 per megawatt-hour (MWh).

The data for producing the above summary was downloaded from the Australian Energy Market Operator (AEMO) web page "Aggregated price and demand data". 

The difference in price, $263/MWh in November and $165/MWh in December is the result of there being fewer 5-minute intervals in which the price was greater than $1,000 per MWh. 

• In November there were 92 x 5-minute intervals, which is 7 hours and 40 minutes, when the electricity price was greater than $1,000 per MWh. In these 7 hours and 40 minutes the amount of electricity sold was 70,358 MWh and the price was $706 million.
• In December there were 45 x 5-minute intervals, which is 3 hours and 45 minutes, when the electricity price was greater than $1,000 per MWh. In these 3 hours and 45 minutes the amount of electricity sold was 37,498 MWh and the price was $276 million.

The difference in cost to the electricity retailers who bought this electricity and supplied it to their customers was $430 million. This difference is responsible for the average wholesale price of $263 / MWh in November and $165 / MWh in December.

Note that the change was not because of a change in the total demand for electricity, and it was not due to the technology used to generate electricity. There were the same coal-fired power plants operating in both months. There were the same renewable energy producers operating in both months.

These wholesale electricity costs will be reflected in retail electricity prices in a year's time. 

This is a list of the 45 x 5-minute intervals in December 2024 when the wholesale cost of all electricity bought from the National Energy Market in NSW cost more than $1,000 per megawatt-hour: 

REGION	SETTLEMENTDATE	TOTALDEMAND	RRP	PERIODTYPE
NSW1	2/12/2024 11:30	6651.21	1062.2	TRADE
NSW1	2/12/2024 11:55	6915.82	1120.5	TRADE
NSW1	2/12/2024 12:05	7108.53	1120.5	TRADE
NSW1	2/12/2024 12:15	7217.56	1072.66	TRADE
NSW1	2/12/2024 17:35	11420.62	4438.07	TRADE
NSW1	2/12/2024 17:40	11345.36	1265.73	TRADE
NSW1	2/12/2024 17:45	11334.87	1060.61	TRADE
NSW1	2/12/2024 17:50	11419.9	15619.87	TRADE
NSW1	2/12/2024 17:55	11364.47	15502.98	TRADE
NSW1	2/12/2024 18:00	11296.77	15529.65	TRADE
NSW1	2/12/2024 18:05	11266.03	15576.4	TRADE
NSW1	2/12/2024 18:10	11231.36	10854.53	TRADE
NSW1	2/12/2024 18:15	11227.95	14028.89	TRADE
NSW1	2/12/2024 18:20	11221.26	15799.26	TRADE
NSW1	2/12/2024 18:25	11189.63	14028.89	TRADE
NSW1	2/12/2024 18:30	11126.46	10722.84	TRADE
NSW1	2/12/2024 18:35	11050.58	4308.54	TRADE
NSW1	2/12/2024 18:40	10980.05	4231.24	TRADE
NSW1	3/12/2024 11:40	9317.21	11267.8	TRADE
NSW1	3/12/2024 11:45	9329.63	17499.89	TRADE
NSW1	3/12/2024 11:50	9440.51	14100	TRADE
NSW1	3/12/2024 11:55	9495.45	11922.71	TRADE
NSW1	6/12/2024 14:30	11100.69	17480	TRADE
NSW1	6/12/2024 14:35	11160.06	17499.89	TRADE
NSW1	6/12/2024 14:45	11445.71	15766.43	TRADE
NSW1	6/12/2024 14:55	11505.06	14101.5	TRADE
NSW1	7/12/2024 18:30	10371.8	4127.15	TRADE
NSW1	8/12/2024 18:00	8800.48	2268.8	TRADE
NSW1	9/12/2024 14:40	4981.68	1071.59	TRADE
NSW1	12/12/2024 17:50	10089.88	1227.61	TRADE
NSW1	12/12/2024 17:55	9949.16	1079.75	TRADE
NSW1	12/12/2024 18:00	9944.71	1027.83	TRADE
NSW1	12/12/2024 18:15	10037.17	1257.89	TRADE
NSW1	12/12/2024 18:25	10068.36	4450.07	TRADE
NSW1	12/12/2024 18:30	9915.42	1259.54	TRADE
NSW1	12/12/2024 18:35	9928.09	1276.32	TRADE
NSW1	12/12/2024 18:40	9867.52	1276.93	TRADE
NSW1	12/12/2024 18:45	9864.79	1276.83	TRADE
NSW1	12/12/2024 19:00	9897.33	1292.69	TRADE
NSW1	12/12/2024 19:05	9755.56	1310.71	TRADE
NSW1	12/12/2024 19:10	9730.42	4396.17	TRADE
NSW1	12/12/2024 19:15	9687.3	4451.8	TRADE
NSW1	12/12/2024 19:20	9685.14	9463.19	TRADE
NSW1	12/12/2024 19:25	9591.38	1108.15	TRADE
NSW1	12/12/2024 19:30	9650.85	1129.09	TRADE