The “energy-only” market design of the NEM means two things in parallel:
1) For most of the hours in the year, wholesale spot prices are at levels below their Long-Run Marginal Cost of production – generally above their Short-Run Marginal Cost (variable fuel and O&M).
2) It also means that, for a small (and variable) number of half-hours every year the spot price spikes to levels significantly above a generator’s Long Run Marginal Cost – even up to the Market Price Cap (which is $13,500/MWh in June 2015).
This presents an ideal opportunity for certain types of energy users to gain benefits from this particular form of Demand Response.
As a company, we (GLOBAL-ROAM Pty Ltd, the developers of this site) have been honoured to support energy users operating in this manner since as far back as 2002. We posted this article on WattClarity back in October 2009 to outline some of the benefits of this type of approach.
Since that time, we have been encouraged to see a growing number of large industrial energy users adopt this form of electricity procurement strategy to help to lower their average cost of electricity consumed across a year.
Linked here are articles that have been posted on this site referencing announcements released, or observations made, about this form of demand response.
We would be happy to discuss your particular situation with you – just email us, including your phone number, so we can start off with a phone call – or just call us directly on +61 7 3368 4064.