Electricity

Electricity wholesale markets across the globe are complex and sophisticated. In Australia and New Zealand alone, 3 different regulated markets operate to efficiently manage the supply of electricity from generators to retailers, to customers.

nemDistributionMap

The National Electricity Market (NEM)

The National Electricity Market of Australia was established in 1998 and is operated by the Australian Energy Market Operator (www.aemo.com).

The NEM interconnects five regional market jurisdictions (Queensland, New South Wales, Victoria, South Australia and Tasmania). It supports electricity supply to 19 million residents across a network, that, at over 5,000 km from far north Queensland to Tasmania, and west to Adelaide and Port Augusta, is the longest alternating current system in the world.

Participants in the NEM include generators and retailers who engage in physical energy trading and contract and derivative trading for the primary purposes of hedging demand or load across their portfolios.

With pool market prices fluctuating between -$1000/MWh to over $13,000/MWh, traded across 48 half-hour intervals per day, for multiple year contracts, the challenge of managing the wholesale operations of bidding, contracting, valuation and settlement involves vast amounts of data and considerable complexity.

wemMarketMap

The Wholesale Electricity Market (WEM/SWIS) – Western Australia

Established in 2006, the Wholesale Electricity Market (WEM) for the South West interconnected system of Western Australia (SWIS) serves a population of approximately 2 million people in Western Australia and has a peak demand of approximately 4,000MW.

The geographical separation of Western Australia from the eastern states means that this market is separate from the NEM, and operates in a different manner, namely that it is designed to ensure that WA is self-sufficient for its electricity needs.

The Independent Market Operator (www.imowa.com.au) is responsible for the administration and operation of the WEM while System Management is responsible for the secure and reliable operation and energy dispatch of the SWIS. The WEM contains energy trading features that are different in nature to the NEM, namely:

  • Bilateral Contracts: these are agreements between wholesale market suppliers and consumers for the provision of energy. The market has no role in how these contracts are formed or on the conditions contained within these contracts.
  • The Short Term Energy Market (STEM): the STEM is a daily forward market for energy that allows Market Participants to trade around their bilateral energy positions (established in 2006).
  • The Balancing Market: this market is used to determine actual dispatch in the WEM. Market Participants provide balancing submissions for each trading interval, specifying prices at which their facilities may be dispatched and by how much. The IMO uses these prices to construct the Balancing Merit Order, used by System Management for real time dispatch (established in July 2012).

The WEM also supports other features such as:

  • Demand Side Programmes
  • Reserve Capacity Mechanism, and
  • Ancilliary Services

All of these features must be managed by generators and retailers in the market.


Product Solutions offered for Electricity markets

product_plateform_range

EnergyOne Trading is the most proven and effective Energy Trading and Risk Management (ETRM) available in the market today, used to capture, value and settle contracts for energy, carbon obligations and power purchase agreements and more than 4 million environmental certificates from a wide range of schemes.

EnergyOne Trading can provide out-of-the-box management of contracts for NEM and WEM electricity trading. This includes swaps, options, demand side contracts, PPAs and complex structured trades from deal entry through to settlement, reporting and enterprise integration. Energy One Trading is a proven and reliable enterprise solution capable of rapid implementation for immediate results.

The EnergyOffer (WOS) platform is the no.1 spot trading system available in the NEM today, being used to bid more than 11,000MW of capacity into the NEM market, daily. The system is suitable for WEM markets (STEM, Balancing etc.) and proven with IMO systems.


The New Zealand Electricity Market

nz_transPower

The New Zealand electricity market is a competitive market for the generation, transmission and supply of electricity to a population of 4.4 million people.

New Zealand is extremely self-sufficient for renewable energy, with some 77% of electricity generation in 2011 deriving from renewable sources (hydro and wind), contributing to New Zealand being ranked the 3rd in the world for percent renewables in the primary energy supply.

(Source: http://www.med.govt.nz/sectors-industries/energy/energy-modelling/publications/energy-in-new-zealand-2013)

Regulated by the Electricity Authority (www.ea.govt.nz) and operated by the government owned corporation Transpower (www.transpower.co.nz), the market supplies installed capacity of 9.8GW across a grid comprised of:

  • 11,812 route kilometres of high voltage transmission line;
  • 41,450 supporting towers and poles;
  • 182 substations; and
  • 1122 transformers.

Electricity is traded in a wholesale spot market with across 285 “nodes” (injection and exit points) across the New Zealand grid, every half-hour.

Electricity spot prices are published every 5 minutes and can vary significantly across trading periods, in response to changing demand (weather, season) and supply factors (such as hydro dam levels).

In addition to the market for the physical supply of energy, market counterparties offer to contract with each other to hedge supply and demand through the mechanism of over-the-counter (OTC) contracts and through tradeable futures and options offered by the ASX (www.asx.com.au).


The National Electricity Market of Singapore (NEMS)

singapore_nems_market

The National Electricity Market of Singapore started trading in 2003 and brings together generators, retailers and major users through the formal operation of a half-hourly, wholesale market, regulated by the Energy Market Authority (www.ema.gov.sg) and operated by the Energy Market Company (www.emcsg.com).

During that period, the value of traded energy, reserve and other services on the wholesale market has risen from $3 billion to $10.9 billion in 2012 (Source: https://www.emcsg.com/f279,79678/NEMS_Market_Report_2012_website_2Apr2013.pdf

Some 14,000MW of installed capacity, largely in the form of combined cycle gas turbine and co-generation, supplied Singapore’s 5.5 million customers and business with 44Twh of electricity.

Despite natural constraints, Singapore has set the target of reducing its energy intensity by 35% by 2030, through the use of renewable energy sources, with solar and biofuels being recognised as offering the best opportunities.

In addition to the market for physical energy and services, bilateral OTC contracts exist to enable participants for hedging and risk management purposes. In 2014, the market intends to introduce electricity futures (to be traded on the Singapore SGX exchange).


The Philippines Wholesale Electricity Spot Market (WESM)

philippine_grid_map_small

Established by the Electric Power Industry Reform Act of 2001, the WESM is managed by the Philippine Electricity Market Corporation (PEMC) http://www.wesm.ph/.

The WESM comprises a gross pool market for the trading of electricity across the Philippines regions of Luzon and Visayas with an interim market in Mindanao.

The majority (71%) of the 16,000 MW national power generation is within Luzon, serving the needs of the Manila area (pop. 12 million) and the home to approximately half of the nation’s 92 million people.

The Philippines has a high representation of renewable energy supplies, with approximately 32% (www.doe.gov.ph) of capacity being supplied by Hydro, wind and geothermal units.

Trading in the market takes place around 215 individual nodes. With 124 participants (including 54 generators) trading approximately only 10% (2012) of volume through the market, the room for growth is considerable.

Relevant Product Modules

energyOneEXDoc

energyOneTrading

energyFlowDoc


Markets Served

Electricity
Electricity wholesale markets across the globe are complex and sophisticated…
Gas
Wholesale gas trading in Australia revolves around formal markets…
Carbon
A broad range of environmental and carbon trading obligations exist…
Geo Markets Served
Energy One has proven products and capabilities specifically for the needs….