Sensitivity analysis of the National Electricity Market

This paper presents a sensitivity analysis of the National Electricity Market (NEM) in Australia. The electricity industry has experienced radical transformations in the last years. As in generation and retail sectors, transmission has also faced important changes. The power transmission grid is based on the open access policy to operate. Hence, all the participants of the electricity market have equal access to the transmission grid. In Australia, the generation units are situated over a wide geographic area and require an effective transmission network. At present, NEM contains four interconnected regions which are linearly linked to each other without any major bypass. The Australian national market is based on a pool market structure where all the electricity produced by the generation units is traded. The impact on pool price, and implicitly on the multi-area unit commitment solutions (scheduling of generation units) in the NEM is analysed by using three scenarios: different levels of inter-regional transmission limits (interconnectors) on the network, a different bidding strategy and a forced generation unit outage. The sequential multi-area unit commitment model (SMAUC(-)4) was run for all the above scenarios for a representative summer day, 20 January 2000, using half-hourly trading periods. This work shows that a higher inter-regional transmission capability will have a positive impact on pool price, will reduce significantly the actual level of regionalisation and will contribute to the creation of a true competitive market.