How Australia's National Electricity Market sets spot prices every five minutes, what drives volatility and how commercial buyers can act on the data.
AEMO runs the NEM as a gross pool. Every five minutes it dispatches generators to meet demand, ranked by their bid prices from lowest to highest. The price of the last generator dispatched to clear demand in each region sets that interval’s dispatch price. Six intervals are averaged to produce the 30-minute trading price that determines settlement.
5 NEM regions: NSW1, VIC1, SA1, QLD1, TAS1. WEM (WA1) runs a separate 30-minute trading interval.
The NEM market price cap is currently $17,500/MWh per dispatch interval and the floor is -$1,000/MWh. The cumulative price threshold (CPT) limits sustained high prices across a rolling 336-interval window (7 trading days). When cumulative prices exceed the threshold, the administered price cap kicks in at $300/MWh.
Common drivers include generator outages (reducing available supply), transmission constraints (limiting imports from cheaper regions), high demand events (heatwaves, cold snaps), low renewable output and strategic rebidding by generators who withdraw capacity from low-price bands into higher ones close to dispatch.
Negative prices occur when supply exceeds demand and generators are willing to pay to stay online. This typically happens during high solar/wind output combined with low daytime demand. Generators with must-run contracts, renewable energy certificate obligations, or high start-up costs may bid negative to avoid cycling off and back on.
gridIQ pulls dispatch prices every 5 minutes across all NEM and WEM regions. The free tier includes live prices, pre-dispatch forecasts, generation mix and 5 Watt AI messages per day.
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