What is the cost of electricity in the WEM?
Providing a benchmark electricity price for a large commercial office in Western Australia.
Since Wholesale Electricity Market (WEM) Reform took effect on the 1st October 2023, electricity charges have increased in complexity and costs have mostly risen. This has made it challenging for many to determine the current value of electricity and this report aims to improve transparency by providing a benchmark electricity price for a fictional large commercial customer in Western Australia’s WEM.
Some highlights are provided below, otherwise download the full report here:
Lets meet our customer
A large commercial office building that consumes 3,000 MWh annually, primarily during business hours.
Energy
There are multiple value streams that make up commercial and industrial (C&I) customers electricity bills, perhaps the most familiar of these is energy.
Energy supply agreements can take many shapes and bundling into flat or time-of-use tariffs are common, however the wholesale price of energy varies every 5 minutes throughout the day.
Our customer is well placed to take advantage of the cheapest price period of the day and regularly benefits from negative energy prices as they consume 40% of their load between 9AM-3PM. However, demand is still material in the early evenings with 20% of consumption ocurring between 4PM-8PM, the most expensive price period of the day with average prices typically well above $100/MWh.
The end result for this customer is an average price of $78/MWh for an annual cost around $230,000. Due to their demand pattern their energy is cheaper than the average price however there is always room to improve.
Benchmark electricity price
The benchmark electricity price is the best available reference of a 'fair price' in the current market, based on complete spot exposure to the wholesale market and adjacent mechanisms, and zero risk management. It is unique for each customer as it depends on how and when they use electricity.
Combining all of the value streams in a typical C&I electricity bill, this customer's benchmark electricity price is total of $625,000 annually, equivalent to a flat rate of $209/MWh (or 21 c/kWh).
What about solar PV?
By supplying the customer's load directly and reducing grid consumption, behind-the-meter solar PV can lower costs across a range of value streams.
A series of solar PV system sizes have been modelled and the resulting benchmark electricity price provided below, with a comparison against the business-as-usual scenario.
Hope you enjoyed some of the highlights
Interested in more? Download the full report (PDF)
