Published on February 13th, 2018 | by Giles Parkinson0
Tesla’s South Australia Battery Project Is Setting Market Prices
February 13th, 2018 by Giles Parkinson
Originally published on RenewEconomy
A recent story about the shift of focus from the Tesla big battery of testing and showboating to some serious money-making certainly sparked a lot of interest, as do most stories about this fascinating and important new technology.
That previous story, however, may have given the impression that the Tesla big battery, known as the Hornsdale Power Reserve and operated by Neoen, was just following and cashing in on market gyrations.
Paul McArdle, from Global-Roam, the authors of RenewEconomy’s popular Live NEM-Watch widget, has spied another new development. The Tesla big battery is not just cashing in on price spikes; it is helping to set them.
This graph below sent through by McArdle illustrates how. Take a deep breath and find your reading glasses – and click on the graph to enlarge if you need to.
The key is the dark red – which is top of the range bids. Hornsdale set that price for the capacity of 30MW and above, but the key shift came just before 2 pm (grid time) on Thursday, January 19, when it bid all its capacity into that range.
That bidding pattern was recognized by the Australian Energy Market Operator, which named it as one of the price setters that pushed South Australia’s wholesale market up to the market cap of $14,200/MWh.
As McArdle notes, the Tesla big battery appears to have learned something about bidding behavior from the gas generators, who rarely hesitate to push the market up, and to price caps, when they can.
Whether this becomes part of Hornsdale’s regular bidding strategy, or whether this is just part of the new technology’s voyage of discovery, remains to be seen.
Certainly, many in the market would be disappointed if it turned out that Hornsdale emerged as just another player exploiting its market power.
Perhaps that will end when more batteries are in the grid, rules that encourage such technology are in effect (such as 5-minute settlements and inertia markets), and when the operators, owners and rule makers get their minds around how this fast-speed inverter-based technology can change the market.
(Update: It has also been pointed out to RenewEconomy that under the contract to provide system services to the SA government, Hornsdale is required to bid at $14,200/MWh for government FCAS so as “not to interfere in the market.” It does not necessarily mean that the bids are cleared and only occurs when AEMO moves to a situation called VOLL (value of lost load) when the market reaches its cap as the supply/demand balance reaches a critical area).
On the subject of Hornsdale, McArdle also sent us this graph below, showing Hornsdale discharging at 100MW on the afternoon of January 24, and the intense activity in the battery.
It will likely be busy again this long weekend, with the Bureau of Meteorology forecasts temperatures of more than 42°C in Adelaide on Friday and Saturday, and AEMO earlier this week warning that forecast temperatures would be above the normal operating range for the big fossil fuel plants.
And, just on our Live NEW-Watch widget, it now has a feedback button so you can send questions about its data directly to the people who should know the answer.