The National Electricity Market
May saw significant wholesale spot price increases in all States. SA prices increased 133% compared to average April prices, rising to almost $200/MWh. NSW also averaged close to $200/MWh (75% increase) while QLD prices rose 50% to $165/MWh. VIC was up 52% at close to $125/MWh while TAS had the smallest increase (20%) and the lowest average rate at $84/MWh.
Electricity Generation Mix
Total grid-scale generation for May increased by 19.5% from April levels. With one more day in May included, this still equates to a significant increase in demand as we move towards the cooler winter period where shorter days mean the impacts of roof-top solar on grid demand is greatly reduced.
Gas generation increased significantly in May along with large increases in Hydro, Coal, and Wind generation. Grid scale Solar was the only major “fuel” to reduce generation over the month.
Gas Generation
As noted above gas generation increased in May – up 52% from April levels. Compared to 12 months ago when we were in the middle of an electricity supply crisis, gas generation was 17% lower this year than it was in May 2022.
Gas generation increased in almost all States in May. It rose 77% in QLD, 52% in SA, 31% in VIC and 21% in NSW. The only State to see a reduction was TAS which had a 10% fall on already very low numbers.
Hydro Generation
Hydro generation increased markedly in May, trending just above the 8-year average as shown below. Generation increased 28% compared to April levels.
Water storage levels in Hydro Tasmania’s lakes continued recent declines through May. Storage ended the month at 4,863GWh (34% full), a decrease of 178GWh over the month. This is 5% more than the same time last year and close to the 8-year average level as shown in the following chart.
Snowy Hydro’s storage reduced again slightly during May with reduced inflows during the month and higher levels of generation. Snowy finished the month 63% of full (3,354Gl) – down 3.7% 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 June to August, below median rainfall is likely to very likely (60% to greater than 80% chance) for almost all of Australia.
June to August maximum temperatures are likely to very likely warmer than median (60% to greater than 80% chance) for almost all of Australia.
Above median June to August minimum temperatures likely to very likely (60% to greater than 80% chance) for much of Australia, with below median minimum temperatures likely (60 to 80% chance) for southern parts of the NT and Queensland as well as western NSW and eastern SA.
This forecast is being influenced by several factors, including likely warming in the tropical Pacific Ocean towards El Niño thresholds, potential development of a positive Indian Ocean Dipole, and record warm oceans globally.
New Renewable Generation (Excluding Hydro)
Total renewable generation (wind and solar, including roof-top solar) in April was 4,625GWh – up 1.4% on last month and up 30% on May 2022. Wind generation was up 14% in May compared to April and up 18% compared to May last year. Utility Scale Solar generation was down 10% from April levels but up 43% 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 May for most calendar years - CAL24 increased 2% closing at $140, CAL25 was flat at $126, while CAL26 closed at $134 - up 5% over the month.
Calendar Year Contracts for New South Wales
QLD prices had slightly greater increases, up 5% at $117 for CAL24, increasing 5% in CAL25 closing at $97, and CAL26 finishing up 8% at $94.
Calendar Year Contracts for Queensland
VIC futures prices started much lower than its neighbours to the north but had some larger increases through May, particularly later dated contracts. CAL24 closed at $94 – up 2%, CAL25 was up 7.5% at $83 while CAL26 was up 19%, closing at $80.
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 May, ending the month at $13.77GJ – down a further 12% from last month. Forecast 2023 netback prices are $18.77 – down 11% on what the ACCC was forecasting last month. Forecast prices for 2024 are now sitting at $17 – down 22% compared to April.
Domestic spot gas prices continued to climb through May. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $17.9/GJ, a 47% increase from April levels, well above the regulated gas price cap of $12/GJ, and also now above the LNG netback price. However, these prices are still less than half what they were during last winter.
Gas storage at the key Iona storage facility declined through May. Storage ended the month at 23.4 PJ – a 6% decrease over the month. Storage remains 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 May fell steeply ending the month at close to US$130/T – a greater than 30% drop. 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 rapidly.
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.
Spot LGCs increased again during May finishing up 7% at $58 per certificate. VEECs also rose in price over the month closing it at $73.9, up 4%. All other certificate prices were either flat or decreased. ACCUs were down 9% closing at $35 while ESCs were down 7% at $28. STCs were flat at just below the $40 cap.
Future dated LGC certificate prices increased during May for all years. CAL23 increased by 11% to $59.5, CAL24 by 11% to $51, CAL25 by 7% to $41, and CAL26 by 13% to $31. CAL27 continued the trend increasing 5% to $26.
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/
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