As an electricity generator, Stanwell participates in the National Electricity Market through the physical electricity spot market and the electricity contract market.

National Electricity Market

The National Electricity Market (NEM) is one of the largest interconnected electricity systems in the world. It incorporates approximately 40,000 kilometres of transmission lines and cables, supplying around nine million customers in Australia.

The NEM is a wholesale market through which generators and retailers, like Stanwell, trade electricity. It interconnects the six eastern and southern states and territories and delivers around 80 per cent of all electricity in Australia.

The electricity spot market

The electricity spot market is a highly regulated, highly competitive market, in which electricity supply and demand are instantaneously matched in real-time.

Generators like Stanwell offer to supply the market with specific amounts of electricity at particular prices. These offers are stacked in ascending price order and then progressively scheduled into production to meet demand, starting with the least-cost generation option.

The spot price is calculated on a half-hourly basis. All generators whose energy is dispatched during the half-hour production period receive a price which represents the average of the six, five-minute dispatch periods.

There are more than 30 participants with scheduled market generators in the National Electricity Market. Any of these participants can set the price.

The electricity contract market

Stanwell manages the financial risks associated with spot price volatility by participating in the contract market to lock in firm prices for longer periods of time.

We have a strong contract position which we have built over a number of years. Approximately 85 per cent of our electricity revenue comes from our contracts. These contracts protect both the business and our customers from volatility in the spot market. As the owner of a large diverse portfolio, Stanwell is able to offer a broad range of contracts that can be tailored to meet our customers’ requirements – it’s not one size fits all.

Keen to learn more about Stanwell’s role in the National Electricity Market (NEM)? Watch our video here.