Amber doesn’t set the wholesale price. Instead, it’s set at 30 minute intervals by the Australian Energy Market Operator (AEMO).
It’s normal for the wholesale price to fluctuate up or down in each 30 minute period depending on supply and demand, encouraging more power generation when the grid needs it, and less when it doesn’t.
There are a few key factors that drive the wholesale price up or down in the short-term: whether the sun’s shining or the wind is blowing, the level of demand on the grid, hot or cold weather, and whether important generators and large transmission wires are online and working.
In the short-term, wholesale prices can be cheaper than normal, or more expensive than normal, depending on these factors.
These are the five most common reasons why the wholesale price might be higher than usual.
For example, blistering hot days in summer cause lots of people to turn on their air-conditioners, putting a heavy load on the grid.
Extreme weather can also cause large coal generators to go offline due to mechanical failure.
And in the worst case, extreme hot weather can lead to bushfires that damage major interconnectors and disrupt the supply of electricity.
When the sun sets in the evening the rapid loss of solar generation combined with these other factors can cause serious price spikes in the grid (between $3/kWh and $19/kWh). Luckily, these kinds of price spikes are rare and typically only happen for a few hours every year. You can avoid these price spikes by reducing your energy usage as much as possible for the duration (we'll tell you when it's time). We've put together this guide with handy tips on what to do if there's a price spike.
A less extreme example of grid pressure sometimes occurs during Autumn and Winter: what’s known in German as a dunkelflaute or a “dark lull” in English.
This is a weather pattern where we get cold, dark and still weather before dawn or after dusk, causing renewable generation to plummet close to zero during these times.
On days with these “dark lull” periods wholesale prices in the morning and evenings are typically higher than normal (but not extreme).
These periods of higher than normal prices can last 1-2 weeks before the weather system changes and we start getting more energy from wind generation during peak morning and evening times.
There are four main reasons why the wholesale price might be cheaper than usual.
More expensive hours, days, or weeks are usually cancelled out by cheaper periods further down the line.
That’s why it’s important not to stress about hourly, daily, and weekly fluctuations in the wholesale price, and instead, to take a longer-term view of your savings.
The wholesale price in your area is affected by conditions throughout your state, and to a lesser extent, by conditions across the entire National Electricity Market (NEM). The NEM is a massive network of transmission lines spanning Australia’s Eastern seaboard. You can check out a map of the NEM here.
This interconnectedness comes with both pluses and minuses.
On the negative side, issues affecting the grid in one region, such as a heatwave or bushfires, can have flow-on effects throughout the entire East coast of Australia.
On the plus side, regions with more generation can share power with regions that have less, helping to keep the grid in balance.
Co-founder and Co-CEO