🇦🇺Australia

Congestion Pricing Mis-pricing Revenue Leak

3 verified sources

Definition

Current NEM settlement uses RRP, leading to 'mis-pricing' where generators behind congestion do not capture full locational value differences, distorting income allocation.

Key Findings

  • Financial Impact: 10-20% revenue distortion per congested event; e.g., RRP - LMP difference (AUD 50-1000/MWh) x curtailed MW x hours
  • Frequency: High frequency in constrained regions (QLD, NSW, VIC); assessed by price deviation magnitude
  • Root Cause: Uniform RRP settlement ignores nodal congestion costs; solar bidding exploits limits without true marginal cost exposure

Why This Matters

The Pitch: NEM generators in Australia 🇦🇺 lose 10-20% potential revenue from congestion mis-pricing. Automated LMP/CMM settlement captures full congestion margins.

Affected Stakeholders

Renewable generators, Interconnector operators

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Transmission Congestion Capacity Loss

AUD 100M+ annually in spilled renewable energy (industry estimates); e.g., 175MW limit curtails higher output at RRP ~AUD 100/MWh

Inefficient Congestion Investment Decisions

AUD 500M-1B in deferred/avoidable transmission upgrades; congestion rents (CP x MW) unrecovered

Incident Response Remediation Costs

AUD 500,000 - 2M per ransomware incident (downtime and recovery)

Operational Downtime from Cyber Events

AUD 5,000 - 20,000 per hour of grid downtime

Capacity Loss from Failed Demand Response Events

AUD $15,000-$30,000 per MW annually in missed incentives (e.g., 200kW x 10 events x $15/kW = $30,000)

Delayed Verification and Payment Drag in DR Administration

AUD 30-60 days high Accounts Receivable drag on $4.6m+ payouts; opportunity cost at 10% financing = $460,000+ locked capital

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