Our markets
Australian electricity

The Eastern Australian National Energy Market, or NEM, started in December 1998. One of the first deregulated energy markets in the world, the NEM boasts the longest inter-connected power system globally and more than $10billion of electricity is traded annually*.

Operating a gross pool, where a wholesale spot price reflects 5 minute supply and demand across the whole network, the spot price can be extremely volatile ranging between -$1,000 and $10,000 per MWh (and $12,500 per MWh from 1 July 2010). This volatility creates high risks for retail and generator market participants, but also exceptional opportunities
for investors.

Still an emerging market by global financial market standards, the financial markets that sit atop of the physical energy markets provide the opportunity for investors to gain exposure to Australian energy and carbon.

Basics characteristics of the Australian electricity market:

  • The NEM covers the inter-connected regions of South Australia, Victoria, Tasmania, New South Wales and Queensland
  • Each of these regions has a different spot price every 5 minute interval 24 hours each day
  • Typical system demand of 25,000 MWs with a maximum of approximately 33,000MWs
  • Energy generation mix 81% coal, 12% gas and 7% renewable and other
  • NEM installed summer capacity of over 44,000MW
  • Electricity derivative contracts are listed on a quarterly basis up to 4 years ahead on the Sydney Futures Exchange (SFE). These listed products include futures, caps and options. In addition, there is also an active OTC market for swaps, caps and options.

The independent Australian Energy Market Operator (AEMO) administers the physical side of the eastern Australian gas and electricity markets. AEMO has a list of publications available online. They also provide fee-based introductory courses for those wanting to gain a greater background about the NEM. Further information can be found here: http://www.aemo.com.au/corporate/publications.html

d-CyphaTrade is an independent energy market facilitator and official product sponsor of the Australian electricity futures market. They are a good source of information including online data, education and training.

* source: AEMO Electricity Statement of Opportunities 2009 & AEMO Introduction to the NEM 2009