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The National Electricity Market
Average spot prices increased significantly in all States in November with average prices doubling in Southern States (from low levels last month), and increasing from already high levels last month in NSW and more particularly QLD. The average QLD price at $96.54/MWh was largely driven by a single day (11thNov) where the average price was more than $500/MWh due to, amongst other things, network constraints and low solar generation caused by stormy weather.
Interestingly average peak prices were again less than the overall average price in all States except for SA. This shows the impact of high levels of solar generation(both grid scale and roof-top), often leading to negative pricing during the middle of the day. High prices in the evening peak are not doing enough to counter the low pricing at other times, thus leading to this once unlikely event.
The following graph shows the daily Average Spot Price for the last 6 months, with the current month highlighted for clarity. The QLD and SA price spikes during the month are apparent from the graph. Both VIC and SA had four days during the month where the average spot price for the day was negative – 25th to the 28th Dec.
Electricity Generation Mix
Total grid-scale generation for December increased by 4.8% from November levels. On a daily basis this was a small increase given there is one more day in December. Warmer weather as we moved into summer started to push demand up on hotter days, though not as much we would expect given that December was cooler than “normal”.
Utility scale solar generation increased 64% compared to November as we saw the impact of new large scale solar generation being commissioned, generally clearer days and less economic curtailment of generation. Hydro generation was impacted the most by the increased solar with a 20% decline in generation as they conserved storage during low price periods. Conversely gas generation increased for the first time in many months as high priced periods provided opportunities for them to operate. Coal generation increased in line with the overall increase in demand.
Gas Generation
As noted above Gas generation increased for the first time in six months – up 13% from November levels. However compared to December 2020,gas usage was still 14% lower this year. Gas generation increased compared to November in NSW (52%), QLD (19%), VIC (33%) and TAS (50% off a very low base), while there was a decrease of 7% in SA.
Hydro Generation
Hydro generation decreased markedly in December down 20% and back to close to the 5 year average for the month 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. Storage ended the year at 7,066 (48.9% full), a decrease of 470GWhover the month. This is still 18% more than the same time last year and remains slightly above the highest levels seen, at this time of year, in the last 5years as shown in the following chart.
Snowy Hydro’s storage levels continued to increase during December. Snowy finished the month 52% of full (2,786Gl), up 6% over the month. Levels are now at the highest they have been in the last 5 years as shown in the following chart.
Climate outlook overview (from BOM)
January to March rainfall is likely to be above median for parts of eastern Australia. Much of this area, especially northern Queensland and coastal NSW, has an increased chance of receiving unusually high rainfall, in the top 20% of historical records.
January to March rainfall is likely to be below median for scattered areas of western WA, the eastern Top End of the NT and western Tasmania.
January to March maximum temperatures are likely to be above median for most northern and western areas of Australia as well as parts of the south-east, although eastern parts of NSW and Victoria are likely to be below median.
Minimum temperatures for January to March are likely to be warmer than median except for an area around the Great Australian Bight.
There is an increased chance of unusually high minimum temperatures(in the top 20% of historical records) for January to March over most of Australia (1.5 to more 4.0 times the usual chance), with the highest likelihoods for northern parts of Australia.
The La Niña in the Pacific Ocean, the positive Southern Annular Mode (SAM) and the MJO over the western Pacific are likely influencing the above median rainfall outlooks.
New Renewable Generation
Renewable generation (wind and solar, including roof-top solar) increased to new record levels in December. Total renewable generation was 5,195GWh – up 20% on November and 13% more than the previous record(4,599GWh) set in October. Wind generation was down 2% in December compared to November ,but solar generation was up significantly – 64% 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
CY22 contract prices continued on their step rally through much of December. QLD prices ended the year at $90.74 (up a whopping 24%) – well over twice what they were at their lowest point in February. This reflects continuing concerns around thermal plant availability in the State, higher fuel costs, and recent spiking of spot prices to very high levels. All other States also increased significantly – NSW up 14% to $79, VIC up 10% to $50, and SA was up 8% to $65.
CY23 also showed significant increases in all States. NSW remains the highest priced State at$80 – up 14%. QLD is at $70 – up 13%, while SA was up 9 % to $58, and VIC ended the month at $50.5 – up 5%. CY24 contracts again had large increases in NSW, up15% to $76, and less significant increases in QLD and SA. VIC for CY24 was largely flat. CY25 was unchanged with pricing at, or slightly under $50 for all States except NSW which increased to around $70/MWh, up $5/MWh (7.5%) over the month.
The greater risk assigned to NSW is clearly seen in all years with prices about $10 -15/MWh higher than all other States, though QLD has eliminated the gap in CY2022 and is narrowing it in CY2023.
Contracts for the 2022 Calendar Year (CY22)
Contracts for the 2023 Calendar Year (CY23)
Contracts for the 2024 Calendar Year (CY24)
The Gas Market
Despite a mild start to winter in the northern hemisphere, global energy prices remained high during December. The on-going lack of gas storage /supply in Europe and political disputes impacting supply out of Russia has resulted in elevated wholesale prices for gas and electricity. These have started to flow on to industries heavily reliant on gas and/or electricity such as Aluminium where there have been plant closures in Europe and production scaled back in China.
LNG netback prices (last published mid Dec) have remained high at $41.24/GJ – a 16% increase on last month. Prices for next year are expected to average $34.46/GJ (compared to $24.58 last month) while 2023 netback prices increased to $18.66/GJ ($15.29/GJ last month)
After a large increase in November domestic gas prices were relatively stable through December, increasing slightly to $12.1/GJ up from$11.9/GJ last month – a 1% increase. This is still a 65% discount to LNG netback pricing. If the LNG netback price remains elevated – even at the forecast$34/GJ mark for next year, we would expect this to eventually flow through to 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 December. It ended the month at 12.8 PJ – a 26% increase. However storage is still lower than it has been 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 the large falls in October driven by the Chinese Government intervening in their market, coal prices were largely flat in December ending the month at $160USD/T. However at the start of 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 an immediate spike in international coal prices up to $180USD/T in recent trading. These prices are well above the levels generally 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.
Environmental Certificates
The following graph shows environmental certificate spot prices over the last 18 months.
During most of December VEEC prices remained relatively unchanged ending the month at $78. VEEC prices remain almost twice what they were a year ago.
ESC prices were largely flat over the month, easing to $36 – down $0.25 over the month.
LGCs increased in most years during December on relatively light trading. Spot LGCs were flat over the month closing at $42.00. Calendar 2021 increased finishing at $43, up $1.00 on the prior month. Calendar 2022 also increased – ending $1.80 higher at $41.55. Calendar2023 continued the trend closing at $37.20, up $0.70. 2024 certificates gained $0.45 closing at $31.1. Calendar 2025 closed at $20.4, down $0.85. Calendar2026 closed up $0.75 at $18.0.
STCs eased slightly during the month, closing at $38.95 – down$0.05 on the month.
Australian Carbon Credit Unit (ACCU) pricing continued its rapid increase commented on in recent reports. Prices are now at $61 ($42.75 last month), up a further 19%. ACCU prices have increased by more than 160% over the last 6 months.
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
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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