Explained: AEMO Wholesale Spot Market
The Wholesale Spot Market is the mechanism that the Australian Energy Market Operator (AEMO) uses to match the supply of electricity with real time consumption by households and businesses. All electricity in the spot market is bought and sold at the spot price.
Large electricity generators submit bids to AEMO to supply electricity, these bids state the amount of electricity to be provided and the price. AEMO selects bids which add up to the forecast demand and schedule these to operate every five minutes. The most expensive bid in the group of bids selected to meet the forecast demand sets the spot price.
Small generators that produce electricity into the grid at any time, and who are note selling their generated electricity under contract, get paid the spot price for the amount of electricity that they have exported into the NEM.
For more information on how the wholesale spot market works alongside contract see Spot and contract markets | AEMC.