Economic islands

Economic islands are single regions or groups of regions in the NEM that are economically separated. This occurs when interconnectors are constrained, causing the price for the islanded region(s) to be set by a generator within the islanded region(s). Economic islands are shown by a red outline around the regions that are economically joined.

There are three economic islands in the above image: QLD, NSW+VIC+SA, and TAS. The islands are created because QNI and Basslink are constrained. It is clear that price separation between islands is occuring. The price in QLD is $24.97, NSW+VIC+SA is about $40 and TAS is $1.26. This is because a generator in QLD is setting the price for QLD, a generator in NSW or VIC or SA is setting the price for those regions and a generator in TAS is setting the price for TAS.