The National Electricity Market
December saw significant decreases in the wholesale spot prices in all States except for QLD which saw a 27% increase to $93/MWh. VIC prices dropped 28% to $25/MWh while NSW prices fell 22% to $68/MWh. SA and TAS both decreased around 15% - SA to $38/MWh while TAS averaged $52/MWh
Electricity Generation Mix
Total grid-scale generation for December increased by 8.2% from November levels. Adjusted for the extra day in the month and moving into the holiday period at the end of the month, this was a significant overall increase. Warmer weather as we headed into summer will have contributed to this increase, offset partly by longer sunshine hours, resulting in increased solar rooftop generation (not included in grid scale generation).
Hydro and gas generation were down significantly from November levels. Additional coal, wind and solar generation largely contributed to the overall increase in generation
Gas Generation
Gas generation decreased in December - down 3% from November levels. Compared to 12 months ago gas generation was 34% higher than it was in December 2022.
By State gas generation changes were mixed. NSW decreased 33% from last month’s high level, while SA fell 7%. QLD gas generation increased 7% while VIC also increased by 9%. TAS increased 190% (on very small numbers).
Hydro Generation
Hydro generation decreased 7% in December compared to November levels and was close to the 8-year average as shown below.
Storage in Hydro Tasmania’s lakes reduced through December. Storage ended the month at 6,370GWh (44% full), a decrease of 290GWh over the month. This is 3% less than at the same time last year and still slightly above the average level for this time of year as shown in the following chart.
Snowy Hydro’s storage increased slightly during December. Snowy finished the month 61% of full (3,233Gl) – up 0.8% over the month. Levels remain well above average for this time of year as shown in the following chart.
Climate outlook overview (from BOM)
January to March rainfall is likely to be above median across the south-east of Australia and below median across much of the north and west of Australia.
January to March maximum and minimum temperatures are very likely to be above median for most of Australia.
January to March maximum and minimum temperatures are at least 2.5 times more likely than normal to be unusually high for much of Australia. Unusually high temperatures equate to the warmest 20% of January to March periods from 1981 to 2018.
The long-range forecast is influenced by several factors, including the active El Niño, an easing positive Indian Ocean Dipole event and record warm oceans globally.
New Renewable Generation (Excluding Hydro)
Total renewable generation (wind and solar, including roof-top solar) in December was 6,601GWh – up 12% on last month and 8% on December 2022. It was also another record for total renewable generation in the NEM. Wind generation was up 13% on November and 7% compared to December last year. Utility Scale Solar generation was up 12% from November levels and up 13% 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 continued to fall in December for all calendar years - CAL24 was down 8.5% at $101, CAL25 was down 6% at $105, while CAL26 closed at $113 - down 2% over the month. CAL 27 fell 2% over the month to $116.
Calendar Year Contracts for New South Wales
QLD prices had smaller changes to NSW but in the same direction, down 5% at $94 for CAL24, down 2% in CAL25 closing at $92, and CAL26 finishing down 3% at $89.5. CAL 27 was also down 0.5% at $89.
Calendar Year Contracts for Queensland
VIC futures prices repeated the downward trend of NSW and QLD. CAL24 closed down 10% at $67, CAL25 was down 4% at $69 while CAL26 was down 1.5% closing at $68. CAL 27 ended the month trading down 0.5% at $70.
Calendar Year Contracts for Victoria
SA has 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
Internationally, LNG netback prices ended the month at $19/GJ – down 13% from last month. Forecast prices for 2024 fell sharply to $14.7 – down 21% compared to November. Forecast prices for 2025 were also shown for the first time - $15/GJ.
Domestic spot gas prices were flat through December. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $11.3/GJ, a 1% decrease from November levels. This is still below the regulated gas price cap of $12/GJ, and also well below the LNG netback price. Prices are 23% below what they were the same time last year.
Gas storage at the key Iona storage facility increased through December. Storage ended the month at 21.56PJ – a 6% increase over the month. Storage remains well above the highest we have seen at this time of year for the past 6 years.
LNG is an important fuel for many large energy users, particularly in areas where reticulated natural gas is not available. The contract price of LNG is typically set by international benchmarks such as the Saudi Aramco LPG – normally quoted in US$ per metric tonne.
The following graph shows the Saudi Aramco LPG pricing for the last 3 years as well as forecast pricing for the year ahead.
The other main contributing factor to LPG prices in Australia is the exchange rate against the USD. As shown below this has been falling over the last few years adding to domestic LPG prices.
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 December increased, ending the month at US$148/T – an 11% increase on the November 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.
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 2022 is dampening the impact on electricity prices.
Environmental Certificates
The following graph shows environmental certificate spot prices over the last 3 years.
Environmental certificates showed mainly small increases through December with some flat results. VEECs and ACCUs had the largest percentage movement with a 5% increase while Spot LGCs increased by 2%. ESCs and STCs were unchanged.
Future dated LGCs reversed their trend of recent months by increasing for all years through December. CAL23 increased by 3% to $49, CAL24 increased 3% at $50.5, while CAL25 increased by 6% to $47. CAL26 increased by 8% to $40 while CAL27 rose 10% to $31
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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