South Africa's new wholesale electricity market and Australia's National Electricity Market form their prices the same basic way. Generators offer their power in, the cheapest offers run first, and the last unit needed sets the price for that interval. That is the engine. Oshili Power compared the two rulebooks, the SAWEM Market Code v2.3 against the NEM National Electricity Rules, rule by rule, and on the engine they correspond closely.
But an engine is not a car. Around the engine sits everything else: the temporal and structural wrapper, the settlement arrangements, the timescales, and the ceiling on how high the price may go when supply runs short. The wrapper is where the two markets part company, and they part company materially.
One place to see it plainly is that price ceiling. Annexure 2 of the SAWEM Market Code writes the South African cap at R5,396 per megawatt hour, the unit wholesale power is traded in. Set that beside the cap published in the NEM National Electricity Rules and the arithmetic is stark: the South African ceiling sits roughly 45 times below the Australian one. Two published documents, one division.
A price ceiling is not a technical detail. It decides how much of a firm power station's income can ever come from the scarce hours it exists to serve. Write the ceiling high, and scarcity itself can pay for the plant. Write it low, and the money must come from somewhere else, from contracts, from capacity arrangements, from structure. Neither design is right or wrong, and this piece makes no claim that either market has the better wrapper. The point is narrower and more useful: they are different machines, and a contract priced for one will misprice in the other.
That matters because templates travel. Advisers, suppliers and lenders arrive carrying contract structures, hedges and pricing habits formed in other markets, and the structures look reassuringly professional because they are, for the wrapper they were built in. The question to ask is never whether a structure worked elsewhere. It is whether it has been re-derived here, from the wrapper as South Africa has actually written it, starting with a cap 45 times lower and working outward through everything that ceiling changes.
So when the familiar template lands on your desk, ask to see the derivation. Which written rule does each term price? What happens to this structure at the South African cap? A good counterparty will show you. And if the answer is that this is how it is done in other markets, you have learnt what you needed to know.
Basis
This piece rests on two published rulebooks, the SAWEM Market Code v2.3 with its Annexure 2, and the NEM National Electricity Rules. The South African cap value comes from Annexure 2, and the roughly 45 times ratio is arithmetic on the two documents' published cap levels. Nothing here draws on model runs; the funding mechanism is standard market economics, described plainly.
Oshili Power publishes market analysis for energy intensive buyers, mines, heavy industry and their advisers across South Africa and the Southern African Power Pool, grounded in its working model of the South African Wholesale Electricity Market. The model prices the market's rules as they are written, holds the unresolved design questions open as separately priced worlds, is tested against measured market records, and is intended in time to answer a buyer's questions anywhere on the South African grid. Questions beyond the published analysis are welcome through the contact form on the Oshili Power website.