Spot market settlement on real-time pricing
Decision to implement RTP
28 Jun 2019
We have decided to amend the Code to implement real-time pricing in the wholesale spot market
We have decided to amend the Code to implement real-time pricing (RTP) in the wholesale spot market. The Code amendment implements RTP by:
- determining final spot prices from new ‘dispatch prices’ struck in real-time whenever the system operator issues dispatch instructions
- disestablishing the pricing manager role, as it will no longer be required
- applying scarcity pricing by default to all forecast demand, to ensure all demand has a price
- introducing new ‘risk-violation curves’ to handle shortfalls in instantaneous reserve
- revising the process for manually claiming a pricing error, reflecting the way spot prices will be determined under RTP
- fully integrating dispatchable demand into the system operator’s real-time dispatch process
- extending arrangements for dispatch to make it easier for both smaller-scale purchasers and generators to participate — we call this ‘dispatch-lite’.
Delivery phase begins
RTP will be the largest change to the wholesale spot market since its inception in 1996. Moving to real-time prices makes the spot market simpler overall — prices will now be driven directly by live conditions on the power system, rather than calculated separately the next day using different information. This largely removes the current major source of uncertainty about the price parties will pay or receive for the electricity they buy and sell in the wholesale spot market. Under RTP, the spot prices visible in real-time will be ‘actionable’: consumers and participants can trust and act on those prices with far greater confidence than today.
We all also implement dispatch-‘lite’ as part of RTP, to make it easier for smaller-scale purchasers and generators to participate in dispatch and hence the price setting process.
We expect RTP to unlock significant benefits, while helping ‘future proof’ the electricity market. Consumers and generators that can alter their operations at short notice will have much more reliable price signals to guide their actions. The spot market under RTP will far better support rapidly evolving technologies like battery storage and smart appliances, making it easier to capture the full potential of these innovations.
We will implement RTP in stages over the next four years, with a current expected go-live date of September 2022. We will gazette RTP’s enabling Code amendment after consulting further on its final form, likely in late calendar 2021.
We will also engage with industry and other interested parties throughout this delivery phase. We will provide further details on engagement and our next steps in the coming months.
The decision paper sets out the detailed design for RTP. It concludes two rounds of consultation.
Technical material on the risk violation curve design
2 Apr 2019
In support of the consultation on the remaining-elements of real-time pricing – 29 March 2019 we have published this technical material on the 'risk-violation curve' design element, as a zip archived file. This material includes full modelling results, summary charts, and further technical explanations.