Wholesale energy prices may have hit some of their lowest prices in years, but the total cost of Frequency Control Ancillary Services (FCAS) skyrocketed in Q1 resulting from the South Australian Islanding event. The islanding event threw back into the spotlight the importance of understanding the costs associated with FCAS causer pays. This Chart of the Week takes a look at how causer pays factors have changed for technologies over the past couple of years.
The SA islanding event saw the emergence of new market behaviours whereby some generators reduced their output to zero to avoid the risk of being hit with significant costs resulting from ‘causer pays’. (Quick recap – A causer pays factor is based on how much a generator deviates from their linear ramp rate to meet their next dispatch targets for each dispatch period). While renewable energy generators have historically turned off to avoid negative pricing, a new operational consideration for renewables is the liability that high regulation FCAS prices pose to the profitability of current and future renewable energy projects.