The National Electricity Market
August saw increases in the wholesale spot prices in all States except for QLD. SA prices increased 120% to $160/MWh on the back of one day of extreme pricing on the 11th August. NSW averaged close to $93/MWh (11% increase) while VIC prices rose 17% to $65/MWh and TAS increased 61% to $38/MWh. QLD broke the trend, decreasing 12% to $68/MWh.
Electricity Generation Mix
Total grid-scale generation for August decreased by 5.4% from July levels. Milder weather and longer sunshine hours resulting in increased rooftop generation (not included in grid scale generation) will have contributed to this reduction.
Solar and gas generation increased significantly in August while wind generation reduced again with less windy days. Hydro and coal reduced in-line with the overall reduction in demand.
Gas Generation
Gas generation increased in August - up 5% from July levels. Compared to 12 months ago gas generation was 14% lower than it was in August 2022.
Gas generation increased in NSW (+21%), SA (+23%) and TAS (+175% on very low numbers). It decreased in both QLD and VIC by 10%.
Hydro Generation
Hydro generation decreased in August but remains trending above the 8-year average as shown below. Generation decreased 5% compared to July levels.
High inflows pushed water storage levels in Hydro Tasmania’s lakes to close to 8-year highs through July. Storage ended the month at 6,643GWh (46% full), an increase of 293GWh over the month. This is 17% more than the same time last year and close to the 8-year maximum level as shown in the following chart.
Snowy Hydro’s storage reduced during August. Snowy finished the month 62% of full (3,277Gl) – down 2% over the month. Thanks to La Nina, levels remain well above the highest they have been in the last 8 years, though they are getting closer, as shown in the following chart.
Climate outlook overview (from BOM)
For September to November, below median rainfall is likely to very likely (60% to greater than 80% chance) for most of Australia.
For September to November, above median maximum temperatures are very likely (greater than 80% chance) for almost all of Australia.
For September to November, warmer than median minimum temperatures are likely (60 to 80% chance) to very likely for most of western and southern Australia.
The long-range forecast is influenced by several factors, including likely El Niño development and positive Indian Ocean Dipole development, and record warm oceans globally.
New Renewable Generation (Excluding Hydro)
Total renewable generation (wind and solar, including roof-top solar) in August was 5,024GWh – down 0.5% on last month and up only 3% on August 2022 – the lowest year on year increase we have observed for some time. Wind generation was down 22% in August and down 18% compared to the same month last year. Utility Scale Solar generation was up 27% from July levels and up 44% 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 were quite static in August for all calendar years - CAL24 was flat at $124, CAL25 was up 3% at $121, while CAL26 closed at $125 - up 2% over the month.
Calendar Year Contracts for New South Wales
QLD prices had similar modest changes, down 2.5% at $108 for CAL24, increasing 2.5% in CAL25 closing at $95, and CAL26 finishing up 1% at $92.5.
Calendar Year Contracts for Queensland
VIC futures prices again only had minor changes over the month. CAL24 closed flat at $79, CAL25 was up 4% at $73 while CAL26 was flat, closing at $74.
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
After their recent falls, global energy prices reversed the trend and increased slightly in August. They continue to be at levels above what we would have considered to be high only 2 years 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 ended the month at $13.93GJ – down 5% from last month. Forecast 2023 netback prices are $20.17 – up 4% on what the ACCC was forecasting in July. Forecast prices for 2024 are now sitting at $23.67 – up 17% compared to July.
Domestic spot gas prices reversed the trend of recent months and increased slightly in August. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $11/GJ, a 4% increase from July levels, but still well below the regulated gas price cap of $12/GJ, and also well below the LNG netback price. Prices are 31% below what they were the same time last year.
Gas storage at the key Iona storage facility declined through August. Storage ended the month at 19.05PJ – a 9% decrease over the month. Storage remains well 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 in August drifted higher, ending the month at US$156/T – a 15% increase on the July close. 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, though the gap is closing.
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.
VEECs continued their upward march in August, climbing 2% to $86.25 per certificate. ACCU’s also climbed to 29.5 – up 4%. ESCs had their largest decline in some time – falling 11% to25.5. Spot LGCs reversed the rise from last month decreasing 4% to $54 per certificate. STCs were flat at $39.9 per certificate.
During August future dated LGC certificate prices decreased for CAL23, but increased for all other years. CAL23 decreased by 5% to $55, CAL24 was up marginally at $52.5, CAL25 increased by 2% to $45, and CAL26 by 4% to $34. CAL27 continued the trend increasing 3% to $25.
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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