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The National Electricity Market
Average spot prices increased again in NSW in March, increasing another 20% on the already high prices seen in February. QLD prices came off their very high levels seen last month, dropping almost 10%. SA average prices increased 24% while TAS and VIC prices were largely steady.
The following graph shows the daily Average Spot Price for the last 6 months, with the current month highlighted for clarity. A high price event on the 8th March when the average daily price was $1,300/MWh in QLD can be clearly seen, as well as elevated prices in both QLD and NSW (above $100/MWh) for the rest of the month. SA and VIC had lower priced days early in the month and towards the end of the month when windy weather depressed prices in those regions. There were only a few days when the average price was negative in March – occurring three times in both SA and VIC.
Electricity Generation Mix
Total grid-scale generation for March increased by 9.3% from February levels. The normalised change was a 1.5% decrease after factoring in the increased number of days in the month. This was largely driven by cooler weather reducing demand.
Wind and utility scale solar both decreased their share of total generation last month signalling worse conditions for them – less sunny and windy than February. Due to this each of coal, gas and hydro all increased their share of total generation.
As noted above Gas generation increased in March – up 25%from February levels. As it has in the last 2 months, compared to March 2021gas usage was up, 32% higher than 12 months ago. Gas generation increased compared to February in all States - NSW (57%), VIC (4%), SA (13%), QLD (22%), and TAS (55%).
Hydro generation increased in March, up 10% and still slightly above the average seen over the last 5 years for March 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 5,071 (35.1% full), a decrease of 740GWh over the month. This is now 2% less than the same time last year and slightly below the average level seen in the last 5 years as shown in the following chart.
Snowy Hydro’s storage levels remained static during March. Snowy finished the month 52% of full (2,774Gl) – up 0.2% 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)
April to June rainfall is likely to be above median for northern and eastern Australia, with a small area of western Tasmania likely to be below median. Elsewhere, there are roughly equal chances of above or below median rainfall.
April to June maximum temperatures are likely to be above median for western, northern and southern parts of Australia. Below median temperatures are likely for parts of the east coast.
Minimum temperatures for April to June are likely to be warmer than median across virtually all of Australia.
La Niña 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 in March with less favourable sun and wind conditions. Total renewable generation was 4,147GWh – down 8.6% on February but up 12% on the same month a year ago. Wind generation was down 5% in March compared to February and was at its lowest level since April last year. Solar generation was also down – 7% for utility scale solar and 13% 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 have continued to soar during March – in all States but particularly in NSW and QLD where prices for 2023 have doubled since December, and more than tripled since the lows of February last year. We have even had to increase the vertical axis twice in the last month in the graphs below!
In the short term the war in the Ukraine and the impact that is having on world energy prices has contributed to higher Futures prices in States most impacted by them– namely NSW and QLD. Other States are now becoming collateral damage in terms of their smaller (in absolute terms) but still significant (percentage)increases
CY23 contract prices continued the accelerating separation between States observed over the last few months. NSW prices increased by 57% in March ending the month at $146.QLD prices increased by 62% ending the month at $126.5. SA prices were up 25%to $84 while VIC also increased 30% to $65.5.
CY24 also showed significant increases in all States. NSW remains the highest priced State at$120 – up 43%. QLD is at $91 – up 38%, while SA was up 24 % to $77. VIC was also up, ending the month at $58 – an increase of 15%. CY25 contracts also had increases. NSW ended the month up 33% at $120. QLD and SA both trended up, ending the month at $80 (+11%) and $60 (+8%) respectively. VIC also rose ending at $61.75 (+15%).
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 March 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 increased in March to $44.57/GJ – a 48% increase on last month. Prices for the remainder of 2022 are expected to average $38.2/GJ (a 5%increase on last month) while 2023 netback prices were static at $25.11/GJ –still well above historical levels.
Domestic gas prices increased again through March with the 30day rolling average price at Wallumbilla ending at $10.9/GJ –up from $10/GJ at the end of February, a 9% increase. This is a 75% 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 significantly again during March. It ended the month at 22.3 PJ – a 12% increase – at the top end of the normal operating range seen for this time of year for the past 5years
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 $US300/T, prices increased to new record levels of almost$US420/T before falling and now settling at close to $US280/T.
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 QLD and NSW.
The following graph shows environmental certificate spot prices over the last 18 months.
Australian Carbon Credit Unit (ACCU) and VEEC pricing had the biggest changes in March, in the case of VEECs reducing 29%, back to levels not seen for a year. ACCUs also fell by 36% over the month. Most other certificate prices were largely flat over the month apart from spot LGCs which increased by 7% to $48.
Future dated LGC’s continued their upward trend in 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/
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