The National Electricity Market
March saw a return to the disconnect between wholesale prices in Northern and Southern States. Unseasonably higher demand and supply constraints in NSW and QLD resulted in large increases in spot prices – up 29% and 39% respectively to close to $120/MWh on average. In contrast Southern States average spot prices were between $62 and $72 and had swings of between a 7% increase in VIC to a 33% reduction in SA.
Electricity Generation Mix
Total grid-scale generation for March decreased by 9.2% from February levels. With the extra days in March this equates to a small reduction in demand as we head into the typically lower demand shoulder period.
Wind and Solar generation for the month declined, offset by large increases in gas and hydro. Coal increased in line with the total 9% increase.
Gas Generation
As noted above gas generation increased in March – up 69%. Compared to 12 months ago gas generation was 3% lower than it was in March 2022.
Gas generation increased in all States. It rose 1,436% in NSW, 294% in TAS, 49% in VIC, 34% in SA, and 30% in QLD.
Hydro Generation
Hydro generation rebounded in March to be back well above the 8-year average as shown below. Generation increased 29% compared to February levels.
Water storage levels in Hydro Tasmania’s lakes continued recent declines through March. Storage ended the month at 5,241GWh (36% full), a decrease of 284GWh over the month. This is 3% more than the same time last year and remains well above the 8-year average level as shown in the following chart.
Snowy Hydro’s storage reduced during March with reduced inflows during the month. Snowy finished the month 66% of full (3,510Gl) – down 3.4% 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 May to July, below median rainfall is likely to very likely (60% to greater than 80% chance) for most of Australia.
May to July maximum temperatures are very likely (greater than 80% chance) to be warmer than median for most of Australia.
Above median May to July minimum temperatures are likely to very likely (60% to greater than 80% chance) western and northern Australia, as well as coastal parts of southern and eastern Australia, including Tasmania.
This forecast is being influenced by several factors including an ENSO-neutral pattern (neither El Niño nor La Niña) tending towards El Niño in the latter part of the forecast period, and the chance that a positive IOD event may develop in the coming months, as well as longer-term trends. An El Niño WATCH is current.
New Renewable Generation
Total renewable generation (wind and solar, including roof-top solar) in March was 5,139GWh – down 6.2% on last month but up 16% on March 2022. Wind generation was down 1% in March compared to February and only up 7% compared to March last year. Utility Scale Solar generation was down 11% from February levels but up 17% 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 increased in all calendar years - CAL24 increased 27% closing at $136, CAL25 rose 10% to $119, while CAL26 closed at $115.5 - up 1% over the month.
Calendar Year Contracts for New South Wales
QLD prices had similar increases to NSW, up 29% at $112 for CAL24, increasing 9% in CAL25 closing at $91.5, and CAL26 finishing flat at $82.
Calendar Year Contracts for Queensland
VIC futures prices started much lower than its neighbours to the north and had smaller sized increases through March. CAL24 closed at $86.5 – up 17%, CAL25 was up 10.5% at $70.5 while CAL26 was up 3.5%, closing at $65.
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 several years had already resulted in price increases, before the conflict in Europe accelerated those impacts.
LNG netback prices continued to decline in March, ending the month at $17.5GJ – down 20% from last month. Forecast 2023 netback prices are $22.83 – up 3% on what the ACCC was forecasting last month. Forecast prices for 2024 are now sitting at $21.82 – up 11% compared to February.
After a small increase in February, domestic spot gas prices returned to the downward trend seen over the last few months in March. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $9.3/GJ, a 29% decrease from February levels, and still well below LNG netback levels and the regulated gas price cap of $12/GJ.
Gas storage at the key Iona storage facility increased again through March. Storage ended the month at 24.5 PJ – a 9% increase over the month and now 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. After last month’s large falls prices flattened out during March ending the month at $US194/T, up 4%.
These prices 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 increased significantly during March finishing up 14% at $49 per certificate. ACCUs were also up 8% closing at $38.5. VEECs closed up 5% at $73 while ESCs were also up 2% at $31. STCs were flat at just below the $40 cap.
Future dated LGC certificate prices increased during March for all years apart from CAL26 and 27. CAL23 – 25 each increased by 10% while CAL26 reduced by the same percentage. CAL27 had a smaller reduction of 2%.
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.
© Copyright, 2023. Smart Power Utilities Ltd ABN 72 121 464 864
