The National Electricity Market
April saw a reversal of what we observed in March, with price falls in the Northern States and increases in the Southern States – closing the gap somewhat between the two. NSW and QLD had decreases in spot prices – down 4% and 1% respectively to close to $110/MWh on
average. In contrast VIC and SA average spot prices were around $85 – increasing more than 30%
Electricity Generation Mix
Total grid-scale generation for April decreased by 12.8% from March levels. With one less day in April and Easter and Anzac holidays included, this still equates to a significant drop in demand as we move through the typically lower demand shoulder period.
Gas and coal generation declined significantly in April while hydro was the only major “fuel” that increased output. Wind declined in line with the reduction in days, while solar continued its slide as the days shorten
Gas Generation
As noted above gas generation decreased in April – down 16%. Compared to 12 months ago gas generation was 24% lower than it was in April 2022.
Gas generation decreased in most States. It dropped 31% in QLD, 23% in NSW, and 15% in TAS. Increases were seen in VIC (14%) and SA (8%)
Hydro Generation
Hydro generation increased slightly in April and is trending just above the 8-year average as shown below. Generation increased 3% compared to March levels.
Water storage levels in Hydro Tasmania’s lakes continued recent declines through April. Storage ended the month at 5,041GWh (35% full), a decrease of 200GWh over the month. This is 10% more than the same time last year and remains well above the 8-year average level as shown in the following chart.
Snowy Hydro’s storage reduced again slightly during April with reduced inflows during the month. Snowy finished the month 66% of full (3,485Gl) – down 0.7% over the month. Thanks to La Nina, levels remain well above the highest they have been in the last 8 years as shown in the following chart.
Climate outlook overview (from BOM)
For May to July, below median rainfall is likely to very likely (60% to greater than 80% chance) for almost all of Australia.
May to July maximum temperatures are very likely (above 80% chance) to be warmer than median for the majority of Australia.
Above median May to July minimum temperatures are likely to very likely (60% to greater than 80% chance) for most of the country excluding inland northwest, central and eastern regions.
This forecast is being influenced by several factors including an ENSO-neutral pattern (neither El Niño nor La Niña) tending towards El Niño in the latter part of the forecast period, and the chance that a positive IOD event may develop in the coming months, as well as longer-term trends
New Renewable Generation
Total renewable generation (wind and solar, including roof-top solar) in April was 4,563GWh – down 11% on last month but up 19% on April 2022. Wind generation was down 5% in April compared to March and only up 5% compared to April last year. Utility Scale Solar generation was down 10% from March levels but up 38% over the same month last year.
The following chart shows the monthly energy produced for each of these renewable types since 2017.
The Electricity Futures Market
NSW prices increased in all calendar years - CAL24 increased 1% closing at $137, CAL25 rose 6% to $126, while CAL26 closed at $127.5 - up 10% over the month.
Calendar Year Contracts for New South Wales
QLD prices had smaller changes, flat at $112 for CAL24, increasing 1% in CAL25 closing at $92, and CAL26 finishing up 6% at $87.
Calendar Year Contracts for Queensland
VIC futures prices started much lower than its neighbours to the north but had some larger increases through April. CAL24 closed at $92 – up 6.5%, CAL25 was up 9.5% at $77 while CAL26 was up 3.5%, closing at $67.
Calendar Year Contracts for Victoria
SA has much less liquidity in the futures markets than other States, so changes tend to be lumpier and less a true reflection of the underlying market. For completeness we have included the graph below.
Calendar Year Contracts for South Australia
The Gas Market
Global energy prices continued the falls we have seen in recent months but continue to be at levels well above what we would have considered to be very high only 18 months ago. Lack of investment in new gas supply internationally over several years had already resulted in price increases, before the conflict in Europe accelerated those impacts.
LNG netback prices continued to decline in April, ending the month at $15.65GJ – down 10.5% from last month. Forecast 2023 netback prices are $21.17 – down 7% on what the ACCC was forecasting last month. Forecast prices for 2024 are now sitting at $21.9 – up 0.4% compared to March.
Domestic spot gas prices reversed the trend of recent months with a significant increase in April. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $12.2/GJ, a 31% increase from March levels, close to the regulated gas price cap of $12/GJ and not too far off the LNG netback price.
Gas storage at the key Iona storage facility levelled off through April. Storage ended the month at 24.85 PJ – a 1% increase over the month. Storage remains above the highest we have seen at this time of year for the past 6 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. Prices over the last couple of months has levelled off at around the US$190/T mark. These prices, though well below the highs of the last 12 months, remain above what we expect to see as shown in the following graph of prices over the last 10 years.
High international coal prices continue to be an important driver of high electricity prices especially in the States most reliant on black coal generation – ie QLD and NSW. However the coal price cap of $AUD125/tonne introduced by Governments in December is dampening the impact on electricity prices.
Environmental Certificates
The following graph shows environmental certificate spot prices over the last 3 years.
Spot LGCs increased again during April finishing up 10% at $54 per certificate. All other certificate prices were either flat or decreased by small amounts. ACCUs were down 1% closing at $38. VEECs closed down 3% at $71.25 while ESCs were also down 3% at $30. STCs were flat at just below the $40 cap.
Future dated LGC certificate prices increased during April for all years apart from CAL27. CAL23 increased by 5% to $53.5, CAL24 by 3% to $46, CAL25 by 1% to $38.5, and CAL26 by 2% to $27.5. CAL27 bucked the trend dropping 8% to $24.5.
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/
Disclaimer
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