It’s happening! As of one minute past midnight on 1 October 2021, Stanwell, the Australian Energy Market Operator (AEMO), and our National Electricity Market (NEM) counterparties are implementing five-minute settlement. This means we are now operating in an electricity market that settles the price of what electricity is bought and sold at, in five-minute intervals.
Since the NEM commenced in 1998, generators have dispatched electricity to match demand on a five-minute basis, while the price settlement process has operated on a 30-minute basis, averaging the previous six (five-minute) dispatch prices.
The system was set up this way due to the limited metering and data processing technologies of the time – a drawback being that this difference has sometimes led to inefficient pricing outcomes. Today’s technology which settles prices on a five-minute basis, will align the price settlement and dispatch of energy.
It sounds simple, but it’s easier said than done. Friday 1 October 2021, marks the culmination of three years of hard work and collaboration between Stanwell’s Trading, Risk, Finance, and ICT teams to ensure that Stanwell’s applications, systems, data, and reports are compliant and capable of operating in a five-minute market.
Work on Stanwell’s five-minute settlement project has been underway since 2018 and to date is our largest and most complex ICT project.
Executive General Manager Commercial Strategy and Energy Futures, Steve Quilter, was the initial five-minute settlement program sponsor and helped get the program up and running in November 2018.
“This is the biggest change the industry has undergone for some time – it is a big change for AEMO and a big change for us,” he said.
“From the scoping of the program back in 2018, to the market start on Thursday night, this program has been brilliantly executed by Stanwell’s ICT team, with a massive contribution from the Trading, Risk, and Finance teams, and our suppliers.
“Everyone involved can be proud of the innovation and collaborative efforts that have gone into Stanwell’s updated trading systems.”
Program Sponsor and Executive General Manager Energy Trading, Sophie Naughton, reflected on the work to get to this point, and the work that remains.
“As always in energy, we’ll have challenging and interesting days ahead – we will watch and see how the market responds,” Sophie said.
“I anticipate that we’ll face some snags over the coming weeks and months, and I know the teams will work together to overcome any issues. I’d like to take this opportunity to extend a huge thank you to all involved.
“A significant number of people across Stanwell have been involved in this project. Thank you all for your commitment, dedication, and your resilience. Some of our people have been working on this change for three years, all while juggling their usual workloads and commitments. It has been a monumental effort across the board.”
A period of extended care has commenced to ensure the systems and applications are stable. Further software developments will continue into November 2021.
We’d like to give a huge shout out to the following teams across Stanwell who have contributed to, and supported, our internal project to ensure our business was ready for the five-minute settlement change: