Energy is a hot topic in Australia. From usage to sustainability, it is an issue that affects individuals and communities like few others. In this broadly contentious area, the question of energy prices is particularly charged.
In July 2018, the Australian Competition and Consumer Commission (ACCC) released its long-awaited Retail Electricity Pricing Inquiry report. In it, the watchdog makes 56 recommendations that it says “will save the average household between 20 and 25 per cent on their electricity bill, or around $290 to $415 per annum.”
With small-to-medium businesses also predicted to save 24 per cent on their electricity bills each year, the report’s findings have generated plenty of attention.
Although our data was not used in the ACCC report, CMCRC has already shown how events in the energy market can impact electricity prices.
In 2016, the proposed closure of Hazelwood Power Station in Victoria was widely covered in the media, with feverish speculation around potential price increases. But it has taken CMCRC’s world-leading infrastructure and research expertise to show the full impact of the closure.
CMCRC-SIRCA Energy Research Centre makes the connections
Hazelwood finally closed on 1 April, 2017. Dr Jeff Wong, Head of the CMCRC Energy Research Centre, assisted by researcher Lin Han, used the Market Quality Dashboard (MQD) to examine the data before and after the closure. By doing this, they could determine its impact.
“The closure of Hazelwood certainly seems to have had an impact on Victoria’s generation capacity, with a knock-on effect on electricity prices in Victoria and its interconnected states,” said Dr Wong.
“In the months following the closure, we clearly and consistently see higher wholesale electricity prices in Victoria, New South Wales and South Australia, after controlling for relevant factors such as demand, monopolistic characteristics, price volatility, generation capacity and surpluses from connected states.”
The CMCRC Energy Research Centre is one of four such centres within the CMCRC-SIRCA Research Institute – the others being Finance, Health and Digital Currency.
“Jeff and Lin’s work epitomises what we’ve been doing at CMCRC for almost 20 years,” said Group CEO David Wright. “We work collaboratively with our industry and university partners to apply academic research to solve industry challenges and deliver commercialisable outcomes. In the process, we also develop the next generation of R&D leaders to keep growing the capability of our industry partners.
“Add to that our infrastructure and the tools like MQD, which builds on all the technological innovations we’ve developed over time, and it’s a win-win situation for our partners, our researchers and the economy.”
Click here for more information on how MQD lets you easily visualise complex data like electricity prices. Choose different metrics and draw your own conclusions…
Dr Jeff Wong, Head of Market Quality – Energy
Jeff leads the CMCRC’s Energy Markets Research Centre and is responsible for engaging with government, regulators and industry stakeholders to enable evidence based decisions. He previously worked for Singapore Exchange and held senior positions in the funds management industry. His research outcomes have contributed to a better understanding of the complex relationship between cross-border exchanges and assisted in shaping the rules and regulations governing securities market design. Using his experience in financial and other markets, Jeff seeks to incorporate advance techniques into energy markets to optimise security and reliability. Jeff has a PhD and Honours from the University of Sydney, won significant government funding (from Australian Research Council) and consulted with the NSW government on energy research projects.
CMCRC Research Consultant Lin HanLin is a research consultant at CMCRC and current PHD student at Macquarie University. She holds a Master of Accounting and Finance from the University of Adelaide and a Bachelor of Engineering from Nanjing University of Science and Technology. Lin is currently focusing on energy finance research. Lin’s research interests include econometric modelling and forecasting, energy market design, risk management in energy markets, emission trading and renewable energy. Lin’s research is aiming to help improve the health of energy markets which provide security, reliability and better price and environmental outcome of the economy.