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The National Electricity Market
April saw an acceleration of the spot price rises that have been observed in recent months. NSW average prices were up 86% to $187 and QLD prices were up a further 49% to $220 in April. Southern States closed the gap with NSW and QLD, with VIC increasing 127% to $152, SA up 158% to $142 and TAS up 89% to $141. The following graph shows the average monthly spot price since the middle of 2019. The large recent increases are clear to see.
Drivers for the high prices in NSW and QLD are a continuation of high fuel costs (black coal and gas), which will be discussed later in the report, but exacerbated by coal constraints caused by flooding and some transmission constraints and plant outages. In the Southern States, coal generation outages have meant that transmission constraints that would normally be binding between VIC and NSW are no longer, resulting in VIC (and beyond) prices rising to close to NSW levels.
Another interesting phenomena is that these high prices were not in the main being caused by volatility – ie a few incidents of very high prices (> $300/MWh, the traditional cap level). They are being caused by long periods of pricing at or near $300/MWh. An example can be seen in the following snapshot of 7 days of NSW generation and spot price from OpenNEM. Note the extended periods of $300/MWh pricing coinciding with operation of hydro – Snowy Hydro appears to be offering in its generation at this level.
Other interesting take-outs are:
• The high pricing is often occurring over-night – a historical low price time in the market. A sign of our future without coal?
• These extreme prices are occurring in a shoulder season – traditionally lower demand and therefore lower prices.
Electricity Generation Mix
Total grid-scale generation for April decreased by 7% from March levels. The normalised change was a 4% decrease after factoring in the reduced number of days in the month – noting there were also three public holidays in the month.
Utility scale solar had a significant drop in generation last month with shorter days and more overcast weather. Coal also reduced with weather related coal delivery issues and plant outages. Offsetting this was increased gas usage.
As noted above Gas generation increased again in April – up 7% from March levels. As it has in the last 3 months, compared to April 2021 gas usage was up, 39% higher than 12 months ago. Gas generation increased 218% in VIC and 307% in TAS (from low levels). It also increased 8% in SA. Gas generation was down 37% in NSW and 14% in QLD.
Hydro generation increased slightly in April, up 2% and close to the average seen over the last 5 years as shown in the following chart.
Water storage levels in Hydro Tasmania’s system continued the downward trend that developed at the end of November last year. Storage ended the month at 4,585 (31.8% full), a decrease of 487GWh over the month. This is now 12% lower than the same time last year and close to the lowest level seen at this time in the last 5 years as shown in the following chart.
Snowy Hydro’s storage levels remained static during April. Snowy finished the month 52% of full (2,760Gl) – down 0.5% over the month. Thanks to La Nina, levels remain at the highest they have been in the last 5 years as shown in the following chart.
Climate outlook overview (from BOM)
May to July rainfall is likely to be above median for most of Australia, except south-western Australia and western Tasmania which have roughly equal chances of being above or below median.
May to July maximum temperatures are likely to be above median for northern, and far south-western and south-eastern parts of Australia, but below median for broad areas of inland southern and central Australia.
Minimum temperatures for May to July are very likely to be warmer than median across almost all of Australia.
The weakening La Niña, the chance of a negative Indian Ocean Dipole, and other localised drivers are likely to be influencing this outlook.
New Renewable Generation
Renewable generation (wind and solar, including roof-top solar) was lower again in April with less favourable sun conditions. Total renewable generation was 3,650GWh – down 13.8% on March but up 11% on the same month a year ago. Wind generation was up 1% in April compared to March, near its lowest level since April last year. Solar generation was down – 21% for utility scale solar and 27% for roof-top solar. The following chart shows the monthly energy produced for each of these renewable types since 2017.
The Electricity Futures Market
Futures prices see-sawed through April but overall remained very high with high international energy prices and uncertainty around how long these may stay elevated contributing to nervous electricity market sentiment into the future amongst traders. Short term (2023) Victorian prices rose most relative to other States.
CY23 contract prices had the most volatility of all calendar year products last month. NSW prices dropped in the first half of the month reaching $115/MWh before increasing again to $129 – down 12% in the month. QLD prices mirrored NSW dropping to $99, then increasing back to $121 – down 4%. SA had less swings and ended the month with little change at $85. VIC broke the trend increasing significantly through April ending the month at $77 – up 17%.
CY24 also showed high volatility in NSW and QLD. NSW remains the highest priced State at $103 – down 14%. The gap has closed though with other States. QLD is at $85 – down 7%, while SA was steady at $77. VIC was up, ending the month at $61 – an increase of 5%. CY25 contracts had mainly falls. NSW ended the month down 13% at $104. QLD and VIC both trended down, ending the month at $75 (-6%) and $60.5 (-2%) respectively. SA was flat at $60.
Contracts for the 2023 Calendar Year (CY23)
Contracts for the 2024 Calendar Year (CY24)
Contracts for the 2025 Calendar Year (CY25)
The Gas Market
Global energy prices remained high during April as on-going lack of gas storage / supply in Europe has continued to result in elevated wholesale prices for gas and electricity. On top of that the war in the Ukraine and the potential for sanctions on critical gas supplies from Russia has added to the uncertainty and therefore further added to energy prices.
LNG netback prices fell in April to $38.09/GJ – a 15% decrease on last month. Prices for the remainder of 2022 are expected to average $33.59/GJ (a 12% decrease on last month) while 2023 netback prices increased 12% to $28.11/GJ – still well above historical levels.
Domestic gas prices increased significantly through April with the 30 day rolling average price at Wallumbilla ending at $16.7/GJ – up from $10.9/GJ at the end of March, a 53% increase. This is the highest level observed over the last 8 years but is still a 56% discount to LNG netback pricing. If the LNG netback price remains elevated we would expect this to impact more on the domestic gas and electricity markets.
Gas storage is an important factor in the gas market. The main storage facility at Iona increased during the start of April reaching a high of 23.6PJ before reducing later in the month. It ended the month at 22.8 PJ – a 2% increase – at the top end of the normal operating range seen for this time of year for the past 5 years.
The Coal Market
The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. After starting the month at around $US280/T, prices increased through April to close at $US326/T – up 16%.
These prices are still well above anything seen in the last 10 years as shown in the following graph.
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 all States but particularly QLD and NSW.
The following graph shows environmental certificate spot prices over the last 18 months.
After the large drops in Australian Carbon Credit Unit (ACCU) and VEEC pricing in March, both of these levelled off somewhat in April. ACCU’s dropped a further 8% to end the month at $28 – 50% down on their peak in February. VEECs were flat at $56.5, again well down on February’s peak of $83. Most other certificate prices were largely flat over the month apart from ESCs which decreased by 4% to $34.25.
Future dated LGC’s declined in April with most prices being $0.25 to $0.95 lower than a month earlier. CAL 26 was the exception having a $0.75 increase on March as shown in the following graph.
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/
This document has been prepared for information and explanatory purposes only and is not intended to be relied upon by any person. This document does not form part of any existing or future contract or agreement between us. We make no representation, assurance or guarantee as to the accuracy of information provided. To the maximum extent permitted by law, none of Smart Power Utilities Ltd, its related companies, directors, employees or agents accepts any liability for any loss arising from the use of this document or its contents or otherwise arising out or, or in connection with it. You must not provide this document or any information contained in it to any third party without our prior consent.
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