The National Electricity Market
July saw falls in the wholesale spot price in most States, following on from significant drops in June. TAS prices decreased 39% compared to average June prices, falling to almost $20/MWh. NSW averaged close to $85/MWh (20% decrease) while QLD prices fell 25% to $77/MWh. SA was down 15% at close to $75/MWh while VIC broke the trend, increasing 1% to $55/MWh.
Electricity Generation Mix
Total grid-scale generation for July increased by 1.9% from June levels. With one more day in July included, this equates to a corrected small decrease in demand, impacted by the mild winter we have been having in the NEM.
Hydro and solar generation increased significantly in July while wind generation reduced from the record levels we had in June.
Gas Generation
Gas generation decreased in July by a small amount – down 2% from June levels. Compared to 12 months ago gas generation was 48% lower than it was in July 2022.
Gas generation increased in VIC (+18%), NSW (+11%) and SA (+2%) but dropped in QLD (-9%) and TAS (-51%) on already very low numbers.
Hydro Generation
Hydro generation increased markedly in July, trending well above the 8-year average as shown below. Generation increased 9% compared to June levels.
High inflows pushed water storage levels in Hydro Tasmania’s lakes to close to 8-year highs in June and July. Storage ended the month at 6,350GWh (44% full), an increase of 496GWh over the month. This is 35% 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 was flat during July. Snowy finished the month 63% of full (3,343Gl) – unchanged 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 August to October, below median rainfall is likely to very likely (60% to greater than 80% chance) for large parts of southern and eastern Australia.
For August to October, above median maximum temperatures are very likely (greater than 80% chance) for almost all of Australia.
For August to October, minimum temperatures are likely to very likely (60% to greater than 80% chance) to be above median for almost all of Australia.
For August to October, the forecast is influenced by several factors, including likely El Niño development, potential 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 July was 5,049GWh – up 1.7% on last month and up 20% on July 2022. Wind generation was down 7% in July compared to the record month of June and up 19% compared to July last year. Utility Scale Solar generation was up 19% from June levels and up 22% 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 July for all calendar years - CAL24 decreased 9% closing at $124, CAL25 was down 6.5% at $115, while CAL26 closed at $122 - down 7% over the month.
Calendar Year Contracts for New South Wales
QLD prices had similar decreases, down 9% at $111 for CAL24, decreasing 3% in CAL25 closing at $93, and CAL26 finishing down 1% at $91.5.
Calendar Year Contracts for Queensland
VIC futures prices started much lower than its neighbours to the north but also had some significant decreases through July. CAL24 closed at $79 – down 6%, CAL25 was down 10% at $69 while CAL26 was down 6%, 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 flattened out somewhat in June and July but 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 increased in July for the first time in several months. They ended the month at $14.71GJ – up 22% from last month. Forecast 2023 netback prices are $19.33 – up 3% on what the ACCC was forecasting in May. Forecast prices for 2024 are now sitting at $20.22 – up 19% compared to May.
Domestic spot gas prices continued to fall through July. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $10.6/GJ, an 11% decrease from June levels, well below the regulated gas price cap of $12/GJ, and also well below the LNG netback price. Prices are less than a third what they were the same time last year.
Gas storage at the key Iona storage facility declined through July. Storage ended the month at 21.0 PJ – a 7% 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 June and July stayed in a narrow band of US$125/T to $140/T. They ended the month at US$135/T – a 4% increase on the May 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 July, climbing 3% to almost $85 per certificate. Spot LGCs reversed the fall from last month increasing 4% to $56.5 per certificate. All other certificate prices were either flat or decreased. ACCUs were down a further 9% closing at $28.5.
Future dated LGC certificate prices increased during July for all years. CAL23 increased by 1% to $57.5, CAL24 by 5% to $52, CAL25 by 11% to $44, and CAL26 by 7% to $32.5. CAL27 continued the trend increasing 1% 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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