The National Electricity Market
February was a bit of a mixed bag when it came to Wholesale Market prices with some large increases in some States, and some falls in others. The following graph shows the published average monthly spot price foreach State since the middle of 2019. SA prices averaged $130 – up128% on January driven by some extreme volatility especially during the middle of the month. VIC was also up at $55 (+15%), while TAS dropped 12% to $77. NSW and QLD were largely flat at close to $95.
Electricity Generation Mix
Total grid-scale generation for February decreased by 6.3% from January levels. Adjusting for the lower number of days in February this was more like an increase of around 3% in underlying operational demand. This increase would have been driven by a combination of returning from January shutdowns and some hotter weather during the month lifting gross demand.
Increases in liquid fuels and battery generation reflects the increased spot price volatility seen through the month especially in SA. Hydro generation reduced 21% as operators looked to conserve water in storage, and gas generation was also down 13%.
Gas Generation
As noted above gas generation decreased in February – down 13%. Compared to 12 months ago gas generation was 28% lower than it was in February 2022.
Gas generation decreased in all States except for VIC which increased 11%. It dropped 77% in NSW, 69% in TAS, 8% in QLD, and 4% in SA.
Hydro Generation
Hydro generation decreased in February by 21% from January levels to be very close to the 8 year average as shown below.
Water storage levels in Hydro Tasmania’s lakes decreased in February. Storage ended the month at 5,525 (38% full), a decrease of 455GWh over the month. This is 5% lower than the same time last year but remains well above the 8 year average level as shown in the following chart.
Snowy Hydro’s storage reduced slightly during February with reduced inflows during the month. Snowy finished the month 68% of full (3,634Gl) – down 1.5% 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 March to May, below median rainfall is likely (60 to 80% chance) for most of Australia away
from the south-east coast.
March to May maximum temperatures are likely to very likely (60% to greater than 80% chance)
to be warmer than median for most of Australia except central parts of the New South Wales coast and eastern Victoria.
March to May minimum temperatures are likely to very likely (60% to greater than 80% chance) to be warmer than median for south-western, far south-eastern, and far northern parts of Australia, while below median temperatures are likely (60 to 70% chance) for areas of central
Australia, the central and eastern interior of South Australia and the Kimberley.
This forecast reflects the status and outlook for several climate drivers, including a La Niña nearing its end and ENSO likely being neutral during autumn.
New Renewable Generation
Total renewable generation (wind and solar, including roof-top solar) in February was 5,481GWh– down 5.6% on last month but up 17% on February 2022. Wind generation was down 1% in February compared to January and only up 6% compared to February last year. Utility Scale Solar generation was down 5% from January levels but up 25% 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 decreased in all calendar years - CAL23 decreased 17.5% closing at $110, CAL24 dropped 15% to $104, while CAL25 closed at $108 - down 17% over the month. CAL26 also decreased 5% to $118.
Calendar Year Contracts for New South Wales
QLD prices had similar decreases to NSW, down 22% at $95 for CAL23, decreasing 15% in CAL24 closing at $85, and CAL25 finishing at $82 – down 11%. CAL26 decreased 6% to $84.
Calendar Year Contracts for Queensland
VIC futures prices started much lower than its neighbours to the north and had smaller sized decreases through February. CAL23 closed at $81 – down 12%, CAL24 was down 5% at $70 while CAL25 was down 9%, closing at $63. CAL26 decreased 11% to $63.
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 a number of years had already resulted in price increases, before the conflict in Europe accelerated those impacts.
LNG netback prices continued to decline sharply in February, ending the month at $21.75/GJ –down 35% from last month. Forecast 2023 netback prices are $22.18 – down a further 14% on what the ACCC was forecasting last month. Forecast prices for 2024 are now sitting at $19.71 –down 13% compared to January.
Domestic spot gas prices increased for the first time in a few months during February. The following graph shows the 30 day rolling average price at Wallumbilla gas supply hub – ending the month at $13.1/GJ, a 7% increase from January levels, still well below LNG netback levels though the gap is closing fast.
Gas storage at the key Iona storage facility increased again through February. Storage ended the month at 22.5 PJ – a 7% increase over the month and still close to 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 continued recent falls during February ending the month at $US187/T, down over 20% and down more than 50% from what it was at the start of the year.
These prices still remain well 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 2.5 years.
Spot LGCs declined significantly again during February, dropping to below $40 in the middle of the month before recovering – finishing down another 13% at $43 per certificate. ESCs were also down around 6% at $30.5 while ACCUs were down 3% at $35.8. STCs and VEEC were close to flat.
Future dated LGC certificate prices decreased during February for all years apart from CAL27 which increased marginally. CAL23 – 26 dropped by between 4 and 11%.
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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