The National Electricity Market
May saw an exceptionally large increase in wholesale spot prices in NSW, with further significant increases in all other States. Forced coal fired generator outages coinciding with low solar and wind generation at times, and exacerbated by transmission constraints, caused NSW prices to go to their maximum levels on numerous occasions during the month. NSW spot prices averaged $274 – up 205% on April prices. TAS prices increased 92% to $141 while SA and VIC were both close to $135 (up about 50%). QLD prices increased the least – up 9% at $93.
Electricity Generation Mix
Total grid-scale generation for May increased by 11.2% from April levels – corrected for the increased days in the month, and reduced roof-top solar output, this still amounts to a significant increase in demand as we move towards the cooler winter months and increasing heating loads.
Gas generation increased significantly in May along with large increases in Coal and Wind generation. Grid scale Solar was the only major “fuel” to reduce generation over the month.
Gas Generation
Gas generation increased in May - up 64% from April levels. Compared to 12 months ago gas generation was 10% less than it was in May 2023.
By State, gas generation changes were mainly positive. TAS increased over 1,000% (on very small numbers). VIC increased over 400%, again on small numbers, while NSW increased over 200%. SA increased 40% while QLD was the only State to reduce gas generation – down 4%.
Hydro Generation
Hydro generation increased 5% in May compared to April levels but was slightly lower than the 9-year minimum for this time of year as shown below.
Storage in Hydro Tasmania’s lakes continued to drop through May. Storage ended the month at 4,431GWh (31% full), a decrease of 358GWh over the month. This is 14% less than at the same time last year and is now below the 9-year average level, for this time of year, as shown in the following chart.
Snowy Hydro’s storage also decreased again during May. Snowy finished the month 51% of full (2,721Gl) – down 5% over the month. Levels remain well above the 9-year average for this time of year as shown in the following chart.
Climate outlook overview (from BOM)
Winter days and nights are very likely to be warmer than average across Australia, with a high chance of both days and nights being in the highest 20% of historical temperatures.
For most of Australia, there is no strong signal towards above or below average rainfall for winter. The forecast suggests above average rainfall is likely over parts of the west, some central southern areas of the mainland and Queensland's North Tropical Coast.
Rainfall for parts of eastern Australia is likely to be below average in June, while in July and August, rainfall for parts of the interior is likely to be above average.
New Renewable Generation (Excluding Hydro)
Total renewable generation (wind and solar, including roof-top solar) in May was 4,490GWh – the lowest level since July 2022. It was down 6% on last month and 3% on May 2023. Wind generation was up 10% on April levels but down 11% compared to May last year. Utility Scale Solar generation was also down 17% from April levels but up 5% 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
Futures prices increased again in May, in all States, across all calendar years.
In NSW CAL25 was up 26% at $136.5, CAL26 was up 27% at $137, while CAL27 also closed at $137 - up 27% over the month.
Calendar Year Contracts for New South Wales
QLD prices for CY 2025 had a 17% increase to $111.5. CAL26 increased 17% closing at $106, while CAL27 finished up 16% at $104.
Calendar Year Contracts for Queensland
VIC futures prices for CAL25 closed up 16% at $81.5, CAL26 was up 17% at $78.5 while CAL27 was up 19% closing at $74
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 $13.62/GJ – up 8% from last month. Forecast prices for 2024 increased to $14.81 – up 9% compared to April. Forecast prices for 2025 were also up 12% at $16.46/GJ.
Domestic spot gas prices increased through May. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $13.2/GJ, a 13% increase from April levels. This is above the regulated gas price cap of $12/GJ and close to the LNG netback price. Prices are 26% below what they were the same time last year.
Gas storage at the key Iona storage facility fell sharply through May. Storage ended the month at 21PJ – a 12% decrease over the month. Storage is now close to the normal levels we have seen at this time of year for the past 8 years.
LPG is an important fuel for many large energy users, particularly in areas where reticulated natural gas is not available. The contract price of LPG is typically set by international benchmarks such as the Saudi Aramco LPG – normally quoted in US$ 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 May were largely flat, ending the month at US$143/T – a 1% decrease on the April close. These prices are finally returning to levels close to 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 has dampened the impact on electricity prices. This cap is due to expire at the end of June this year.
Environmental Certificates
The following graph shows environmental certificate spot prices over the last 3.5 years.
VEECs surged above the $100 mark increasing 17% to $115. Other certificate prices were largely flat. ESCs increased 1% to 19.65 while LGCs and ACCUs both fell 1% to $46 and $33.25 respectively. STCs were unchanged at $39.9.
Future dated LGCs were down slightly across the board through May. CAL24 was down 3% at $47.5, CAL25 down 5% at $46.4, while CAL26 decreased by 3% to $39.4. CAL27 also decreased by 2% to $33.6 while CAL28 fell 2% to $28.65.
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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