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The National Electricity Market
Average spot prices increased significantly in all States in November with average prices doubling in Southern States (from low levels last month), and increasing from already high levels last month in NSW and more particularly QLD. The average QLD price at $96.54/MWh was largely driven by a single day (11thNov) where the average price was more than $500/MWh due to, amongst other things, network constraints and low solar generation caused by stormy weather.
Interestingly average peak prices were again less than the overall average price in all States except for SA. This shows the impact of high levels of solar generation(both grid scale and roof-top), often leading to negative pricing during the middle of the day. High prices in the evening peak are not doing enough to counter the low pricing at other times, thus leading to this once unlikely event.
The following graph shows the daily Average Spot Price for the last 6 months, with the current month highlighted for clarity. The high QLD price on the 11th Nov. and generally higher prices in the second half of the month are apparent from the graph.
Electricity Generation Mix
Total grid-scale generation for November decreased by 1.3% from October levels. On a daily basis this was a small increase given there is one less day in November. Warmer weather heading toward summer has started to push demand up on hotter days, though not as much we would expect given that November was cooler than normal.
Gas generation and solar reduced most during the month. Solar due to a combination of cloudier days, and when it was sunny, more economic curtailment (switching off) when negative prices meant they would have been paying to run. Wind output increased by 13%. Renewable generation (excluding roof-top solar) was a little down on last month, making up 27% of the total. Interestingly coal generation stayed steady, going against the overall reduction in demand.
Gas generation decreased for the fifth month running in November, dropping a further 4% on October levels as lower demand pushed back the need for as much gas. Compared to November 2020, gas usage was 25% lower this year. Gas generation decreased compared to October in VIC (-29%) and SA (-12%), while there were small increases in NSW (4%), QLD (2%) and TAS (37% off a very low base).
Hydro generation decreased slightly in November but was well above the 5 year average for the month as shown in the following chart.
Water storage levels in Hydro Tasmania’s system continued to rise for the first 3 weeks of November with sustained high inflows into the catchment areas. The end of the month saw storage start to trend downward, finishing the month at 7,536GWh (52.2% full), a decrease of 44GWh over the month. This is now 23% more than the same time last year and remains above the highest levels seen, at this time of year, in the last 5 years as shown in the following chart.
Snowy Hydro’s storage levels also increased again during November. Snowy finished the month 50% of full (2,636Gl), up 7% over the month. Levels are now 14% above the 5 year average as shown in the following chart.
Climate outlook overview (from BOM)
January to March rainfall is likely to be above median for eastern Queensland and north-eastern NSW, as well as small patches elsewhere. Much of this area is likely to receive rainfall in the top 20% of historical records.
January to March maximum temperatures are likely to be above median for most of Australia, except parts of eastern Australia and the southern coastline of WA where the outlook is either mixed or below median.
Minimum temperatures for January to March are likely to be warmer than median nationwide.
There is an increased chance of unusually high minimum temperatures(in the top 20% of historical records) for January to March over all of Australia (1.5 to more 4.0 times the usual chance), with the highest likelihoods for northern Australia and north-western Tasmania.
The fortnight from 20 December 2021 to 2 January 2022 has a generally mixed outlook for rainfall, with patches of wetter than median along the eastern coast of Australia, and drier than median in patches elsewhere. Maximum temperatures are also likely to be below median for the southern half of Australia in this fortnight.
The La Niña in the Pacific Ocean, the positive Southern Annular Mode (SAM) and the strengthening MJO over the western Pacific are likely influencing the above median rainfall outlooks.
New Renewable Generation
Renewable generation (wind and solar, including roof-top solar) decreased for the first time in 5 months in November to 4,327GWh, down5.9%. It was up 5.5% compared to November 2020. Wind generation was static in November compared to October, but solar generation was down – -7% for roof-top solar and-17% for utility scale solar. The following chart shows the monthly energy produced for each of these renewable types since 2017.
The Electricity Futures Market
CY22 contract prices increased sharply in all States during November. QLD prices ended the month the most expensive State (overtaking NSW) at $73.25 (up 10%) – higher than any time since CY22 prices started to be published 3 years ago, and almost double what they were at their lowest point in February this year. This reflects continuing concerns around thermal plant availability in the State, and higher fuel costs. All other States also increased significantly – NSW and VIC up 5% to $70 and $50 respectively, while SA was up 10% to $60.
CY23 also showed significant increases in all States. NSW remains the highest priced State at$70 – up 5%. QLD is closing the gap at $62 – up 10% while SA was up 5 % to $53,and VIC ended the month at $48 – up 4%. CY24 contracts showed a similar trend to CY23. CY25 was unchanged with pricing at, or slightly under $50 for all States except NSW which is sitting around $65/MWh.
The greater risk assigned to NSW is clearly seen in all years with prices about $10 -15/MWh higher than all other States, though QLD has eliminated the gap in CY2022 and is narrowing it in CY2023.
Contracts for the 2022 Calendar Year (CY22)
Contracts for the 2023 Calendar Year (CY23)
Contracts for the 2024 Calendar Year (CY24)
The Gas Market
Global energy prices remained high during November with alack of gas storage / supply in Europe leading into their winter meaning that demand for LNG stayed high. However Asian markets have been outbidding them for scarce supply, meaning that there is the real potential of energy supply shortages in Europe over the winter. After LNG netback prices increased by more than 200% in the previous two months, they dropped in November, ending the month at $35.53/GJ – a 10% decrease from October’s high. Prices for next year are expected to average $24.58/GJ (compared to $19.75 last month) while for the first time 2023 netback prices are being published at $15.29/GJ
Domestic gas prices jumped during November, increasing to$11.9/GJ up from $8.3/GJ last month – a 44% increase. This is still a 66% discount to LNG netback pricing. If the LNG netback price remains elevated –even at the forecast $25/GJ mark for next year, we would expect this to eventually flow through to the domestic gas and electricity markets.
Gas storage is an important factor in the gas market. The main storage facility at Iona decreased significantly during November. It ended the month at 10.2 PJ – a 20% decrease. Storage is now lower than it has been this time of year for the past 5 years.
The Coal Market
The global energy crisis has been almost as much about coal as it has gas. After the large falls seen last month when the Chinese Government intervened in their market, coal prices stabilised in November – in a range of $140-160USD/T. These prices are still well above the levels generally seen in the last 10 years as shown in the following graph. International prices ended the month at$159USD/T, up 6% in the month.
Like gas, the price of coal can flow through and have an impact on the electricity market. Coal, especially black coal, is often the marginal generator in a number of States. We believe these higher coal prices are part of the driver for higher spot and futures prices in QLD and NSW.
The following graph shows environmental certificate spot prices over the last 18 months.
During most of November VEEC prices remained relatively unchanged, however in the last week the fear of more restrictions, due to yet another Covid variant outbreak, caused prices to jump – ending the month at $78, a 12% increase, reversing their falls from last month. VEEC prices are more than twice what they were a year ago.
ESC prices were largely flat over the month, easing to $36.25 – down $0.25 over the month.
LGCs increased in November for near dated periods, while they were largely flat for later periods. Spot LGCs increased $2.20(5.5%) over the month to close at $42.00. Calendar 2021 also increased finishing at $42, up $2.00 on the prior month. Calendar 2022 also increased – ending up $0.65 higher at $39.75. Calendar 2023 continued the trend closing at $36.50,up $0.10. 2024 certificates gained $0.25 closing at $30.75. Calendar 2025 closed at $21.25, down $0.75. Calendar 2026 closed up $0.75 at $17.25.
STCs gained slightly during the month, closing at $39 – up$0.05 on the month.
Australian Carbon Credit Unit (ACCU) pricing continued its rapid increase commented on in recent reports. Prices are now at $42.75 ($37 last month), up a further 16% on top of the 40% rise last month. ACCU prices have more than doubled over the last 6months.
About this Report
This energy market summary report provides information on wholesale price trends for all regions within the National Electricity Market (NEM) and environmental scheme certificates.
Please note that all electricity prices are presented as a $ per MWh price and all certificate prices as a $ per certificate price.
All NEM spot prices are published by the Australian Energy Market Operator (AEMO). Futures contract prices are sourced from ASX.
Further information can be found at the locations noted below.
- NEM Spot market – AEMO publishes a range of detailed information which can be found here: https://aemo.com.au/Electricity/National-Electricity-Market-NEM/Data-dashboard
- Weather and Climate data – The Bureau of Meteorology publishes a range of weather related information which can be found here: http://www.bom.gov.au/climate/
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