Średnie ceny sprzedaży i EaR dla wytwórców energii elektrycznej w Australii   
[Average dispatch prices and Earnings-at-Risk for generators in Australia]*

Stefan Trueck (Centre for Risk Analytics, Macquarie University, Sydney, Australia)


Electricity markets are currently going through a period of substantial transformation 
from fossil fuel fired power generation to an increasing share of renewable energy. 
Uncertainty involved in this transition poses substantial challenges for market 
participants and regulators. This paper examines dispatch-weighted prices (DWP) and 
earnings-at-risk (EaR) for different generation technologies in the Australian National 
Electricity Market.

We find that dispatchable generators such as hydro, natural gas, battery storage, 
kerosene and diesel oil plants with controllable and flexible output achieve 
significantly higher DWPs than less flexible generators such as coal fired power plants. 
They also achieve higher DWPs than variable renewable energy (VRE) generators, i.e. 
solar and wind farms, which are non-dispatchable. Examining cashflow-based EaR measures, 
we further find very different risk profiles for different generation technologies. 
While dispatchable and flexible generators with stronger correlation with spot prices 
have significantly higher upside potential of earnings compared to coal fired plants and 
VRE generators, their EaRs are also much higher, which indicates greater uncertainty in 
profits.

Furthermore, we find seasonal variation in the DWPs and earnings of generators with 
higher uncertainty and dispersion observed in summer. Our analysis provides important 
insights to investors on decision making, hedging strategies and portfolio management, 
as well as to regulators on effective planning to ensure sustainable and secure supply 
of electricity.


*Joint study with: Lin Han and Nino Kordzakhia