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The National Electricity Market
Average spot prices increased again in all States in January. Very high prices in QLD continued through January – a 9% increase on average from December. SA prices also stayed high (27% increase) driven by some high price events. VIC average spot price nearly doubled from December mainly due to high prices towards the end of the month.
The trend continued in January where average peak prices were less than the overall average price in all States. High levels of spot price volatility are leading to what were previously unusual average price outcomes.
The following graph shows the daily Average Spot Price for the last 6 months, with the current month highlighted for clarity. Higher average daily prices in QLD (exceeding$100/MWh) can be seen throughout most of the month. The SA price spikes on the10th Jan and the 31st Jan are apparent from the graph, as are spikes in QLD and VIC on the 31st. Both VIC and SA had a few days during the month where the average spot price for the day was negative.
Electricity Generation Mix
Total grid-scale generation for January increased by 8.5% from December levels. Warmer and more humid weather pushed up demand, though not as much as is often the case in January with the absence of any extreme heatwaves this year in the south-east of the country.
Gas generation increased 30% compared to December as it was increasingly used through peak demand periods. Similarly hydro generation was up 11% as they looked to benefit from periods of high pricing. Utility scale solar generation decreased 5%compared to December indicating cloudier days or more curtailment of generation during January, while wind generation increased by 7%. Coal generation increased in line with the overall increase in demand.
As noted above Gas generation increased again in January – up30% from December levels. For the first time in several months compared to January2021 gas usage was up, 19% higher than 12 months ago. Gas generation increased compared to December in NSW (105%), VIC (324%), SA (28%) and TAS (3748% off a very low base), while QLD had unchanged gas generation.
Hydro generation increased in January, up 11% - above the maximum seen over the last 5 years for January 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 6,430 (44.5% full), a decrease of 640GWh over the month. This is still15% more than the same time last year and remains slightly 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 continued to increase during January. Snowy finished the month 53% of full (2,808Gl), up 1% over the month. Levels remain at the highest they have been in the last 5 years as shown in the following chart.
Climate outlook overview (from BOM)
February to April rainfall is likely to be above median for much of Eastern Australia, while below median rainfall is likely for parts of inland Western Australia and north-east SA.
February to April maximum temperatures are likely to be above median for much of the west, south and north-east, with southern parts of the east coast likely to be below median.
Minimum temperatures for February to April are likely to be warmer than median Australia wide.
The La Niña in the Pacific Ocean, and the neutral-to-near-positive state of the Southern Annular Mode (SAM) are likely influencing the rainfall outlooks.
New Renewable Generation
Renewable generation (wind and solar, including roof-top solar) dipped slightly from December’s record levels. Total renewable generation was 5,067GWh – down 2.5% on December. Wind generation was up 6% in January compared to December, but solar generation was down – 6% for utility scale solar and 9% for roof-top solar. The following chart shows the monthly energy produced for each of these renewable types since 2017.
The Electricity Futures Market
CY22 contract prices continued the accelerating separation between States observed over the last few months. QLD prices increased by a further 19% in January ending the month at $108 – approaching three times what they were at their lowest point just 12 months ago. This reflects continuing concerns around thermal plant availability in the State, higher fuel costs, and recent spiking of spot prices to very high levels. SA prices were also up – 8%to $70.6 while NSW was flat at $83.5. VIC bucked the trend dropping 10% to$53.6.
CY23 also showed significant increases in all States. NSW remains the highest priced State at$85 – up 5%. QLD is at $76 – up 8.5%, while SA was up 10 % to $64. VIC again reversed the trend ending the month at $49 – down 7%. CY24 contracts were more subdued. NSW increased at the start of the month to $79 before declining, ending the month flat at $76.7. QLD and SA both trended up, ending the month at$61.3 (+3%) and $60 (+5%) respectively. VIC again dropped over the month ending at $47.3 (-2%). CY25 was largely unchanged in VIC and SA at, or slightly under$50. QLD pushed up closer to $55 (+4%) and NSW also rose to $73 (+4%) over the month.
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 January as on-going lack of gas storage / supply in Europe and geopolitical disputes impacting supply out of Russia have continued to result in elevated wholesale prices for gas and electricity. Companies heavily reliant on gas and/or electricity have scaled back production or, in some cases, ceased operations completely.
LNG netback prices reduced slightly but remained high at$39.11/GJ – a 5% decrease on last month. Prices for next year are expected to average $36.3/GJ (compared to $34.46 last month) while 2023 netback prices increased to $23.71/GJ ($18.66/GJ last month)
Domestic gas prices dropped through January with the 30 day rolling average price at Wallumbilla ending at $9/GJ –down from $12.1/GJ at the end of December, a 25% decrease. This is a 77%discount to LNG netback pricing. If the LNG netback price remains elevated we would expect this to eventually impact on the domestic gas and electricity markets.
Gas storage is an important factor in the gas market. The main storage facility at Iona increased significantly during January. It ended the month at 16.6 PJ – a 29% increase – back within the normal operating range seen for 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 a quadrupling of prices through most of 2021 followed by the large falls in October driven by the Chinese Government intervening in their market, coal prices rose again sharply through January. Indonesia, the world’s largest exporter of thermal coal used for power generation, banned all exports of coal for January to protect their domestic supply. This caused a spike in international coal prices up to $223USD/T in recent trading – an increase of30% over the month. These prices are well above the levels seen in the last 10years 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 QLD and NSW.
The following graph shows environmental certificate spot prices over the last 18 months.
During the first half of January VEEC prices remained unchanged at $78 before increasing later in the month ending at$80. VEEC prices remain about twice what they were just over a year ago.
ESC prices were largely flat over the month, firming to $36.9 – up $0.9 over the month. Spot LGCs increased – up $1.10 during January. STCs firmed slightly during the month, closing at $39.25 – up $0.3 on the month.
Australian Carbon Credit Unit (ACCU) pricing continued its rapid increase commented on in recent reports. Prices are now at $56 ($51 last month), up a further 10%. ACCU price shave increased by more than 150% over the last 6 months.
Future dated LGC’s continued their upward trend in January as shown in the following graph.
Calendar 2021increased finishing at $46, up $3.00 on the prior month. Calendar 2022 also increased – ending $3.20 higher at $44.75. Calendar 2023 continued the trend closing at $39, up $1.80. 2024 certificates gained $1.40 closing at $32.50.Calendar 2025 closed at $23.75, up $3.35. Calendar 2026 was unchanged at $18.
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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