Mercury Rising

Two weeks into March and perhaps we have finally seen the back of the scorching temperatures and that have led to unprecedented electricity market outcomes in Queensland, and a long-awaited (at least by generators) high price event in New South Wales.

Against this backdrop, this week our charts examine just how high the mercury rose in New South Wales and Queensland over the last couple of months.

Chart 1: NSW daily maximum demand versus average temperature

First, we need to explain the concept of a ‘cooling degree day’.

Chart 1 shows maximum NSW demand versus average air temperature (at Bankstown airport) on a daily basis from 1 January 2011 to 1 March 2017.

You can see the strong relationship between temperature and demand, which results in the striking vee-shape of the chart. The join of the vee sits at about 18 to 19 degrees Celsius. On days where the temperature increases above 19 degrees, demand increases because of increased use of air-conditioning. On days when the average temperature falls below 18 degrees, demand increases as customers turn on electric heaters.

Each degree of temperature beyond 19 degrees is known as a ‘cooling degree’. One cooling degree for one day is referred to as a ‘cooling degree day’ or ‘CDD’. We can define an equivalent concept of heating degree days.

Chart 1 – Relationship between average daily temperature and maximum demand in NSW (1 January 2011 to 1 March 2017)

Charts 2 and 3: Historical cooling degree days for NSW and Queensland in January and February

So how many cooling degree days were there this summer? To what extent did temperature trigger the use of air-conditioners?

Chart 2 shows the number of cooling degree days in New South Wales in January/February from 2001 to 2017, and chart 3 shows the same analysis for Queensland.

We note the following:

  • We have broken the charts into two panels depending on whether the day was a working day or a weekend. Given that demand is typically higher on working days, high temperatures are most significant to the NEM when they fall between Monday and Friday.
  • We have applied a colour scale to the charts depending on the daily cooling degrees. For example, the 18 CDDs seen on 10 February in NSW (when Tomago was curtailed) are shown in dark red.

Both NSW and Queensland experienced a record number of CDDs in January/February 2017, and a record number of these fell on working days.

Chart 2 – It has been hot in New South Wales this summer

CDDs for January and February 2001 to 2017, measured at Bankstown Airport

Chart 3 – Queensland has also sweltered through a hot summer

CDDs for January and February 2001 to 2017, measured at Archerfield

My two cents

  • Following the heatwave in New South Wales on February 10, there were a lot of people suggesting that the need to curtail Tomago signalled a failure of market design. Chart 2 shows that this was an extremely rare event – a working day with and average temperature of 37 degrees. Don’t tear down the NEM just yet.
  • I have just explained away this summer as a freak event. But with temperatures rising inexorably around the globe, perhaps this is wishful thinking. Maybe we need to start planning on the basis that these events are not so rare after all.

As always, all comments are most welcome.