Learning the Grid: Transformer Architectures for Electricity Price Forecasting in the Australian National Market

The increasing adoption of highly variable renewable energy has introduced unprecedented volatility into the National Electricity Market (NEM), rendering traditional linear price forecasting models insufficient. The Australian Energy Market Operator (AEMO) spot price forecasts often struggle during periods of volatile demand, renewable variability, and strategic rebidding. This study evaluates whether transformer architectures can improve intraday NEM price forecasting. Using 34 months of market data and weather conditions, several transformer variants, including encoder–decoder, decoder-only, and encoder-only, were compared against the AEMO’s operational forecast, a two-layer LSTM baseline, the Temporal Fusion Transformer, PatchTST, and TimesFM. The decoder-only transformer achieved the best accuracy across the 2–16 hour horizons in NSW, with nMAPE values of 33.6–39.2%, outperforming both AEMO and all baseline models. Retraining in Victoria and Queensland produced similarly strong results, demonstrating robust regional generalisation. A feature importance analysis showed that future-facing predispatch and forecast covariates dominate model importance, explaining why a decoder-only transformer variant performed so competitively. While magnitude estimation for extreme price spikes remains challenging, the transformer models demonstrated superior capability in delivering statistically significant improvements in forecast accuracy. An API providing real-time forecasts using the small encoder-decoder transformer model is available at https://nem.redaxe.com