The National Electricity Market
November saw large increases in the wholesale spot prices in all States as prices rebounded from the very low prices observed last month. SA prices increased 197% to $45/MWh while NSW, QLD and VIC all increased by close to 100% at $87, $73 and $35 respectively. TAS had the smallest increase, but still rose by 60% to $60.
Electricity Generation Mix
Total grid-scale generation for November decreased by 0.5% from October levels, though adjusted for the reduced day in the month there was a small increase. Warmer weather as we head towards summer will have contributed to this increase, offset partly by longer sunshine hours, resulting in increased solar rooftop generation (not included in grid scale generation).
Wind generation was down significantly from October’s high levels, while hydro generation also reduced during the month. Gas and coal generation largely picked up the slack, while utility solar generation had a strong increase in output.
Gas Generation
Gas generation increased in November for the first time since August - up 65% from October’s low levels. Compared to 12 months ago gas generation was 7% higher than it was in November 2022 – the first time that there has been a year-on-year increase since October last year.
Gas generation increased in all States apart from TAS - NSW (+550%), VIC (+310%), QLD (+46%), and SA (+26%). TAS bucked the trend with a 28% decline (on very small numbers).
Hydro Generation
Hydro generation decreased 3% in November compared to October levels and was close to the 8-year average as shown below.
Storage in Hydro Tasmania’s lakes reduced through November. Storage ended the month at 6,654GWh (46% full), a decrease of 285GWh over the month. This is the same level as the same time last year and still above the average level for this time of year as shown in the following chart.
Snowy Hydro’s storage also fell during November. Snowy finished the month 60% of full (3,208Gl) – down 2.8% over the month. Levels remain well above average for this time of year as shown in the following chart.
Climate outlook overview (from BOM)
December to February rainfall is likely to be below average across much of the north and west of Australia.
December to February maximum and minimum temperatures are likely to very likely to be above average for Australia.
December to February maximum and minimum temperatures are at least 2.5 times more likely than normal to be unusually high for much of Australia. Unusually high temperatures equate to the warmest 20% of December to February periods from 1981 to 2018.
The long-range forecast is influenced by several factors, including the active El Niño and positive Indian Ocean Dipole events, and record warm oceans globally
New Renewable Generation (Excluding Hydro)
Total renewable generation (wind and solar, including roof-top solar) in November was 5,886GWh – down 9% on last month and up 7% on November 2022. Wind generation was down 22% on October and down 2% compared to November last year. Utility Scale Solar generation was up 9% from October levels and up 23% 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 continued to fall in November for all calendar years - CAL24 was down 2.5% at $104, CAL25 was down 5.6% at $110, while CAL26 closed at $115 - down 4.5% over the month. CAL 27 fell 2% over the month to $121.5.
Calendar Year Contracts for New South Wales
QLD prices had smaller changes to NSW but in the same direction, down 1.6% at $95.5 for CAL24, down 2% in CAL25 closing at $92.5, and CAL26 finishing down 0.4% at $91. CAL 27 was also down 1.5% at $89.
Calendar Year Contracts for Queensland
VIC futures prices repeated the downward trend of NSW and QLD. CAL24 closed down 1% at $70.5, CAL25 was down 0.5% at $69 while CAL26 was down 3% closing at $68. CAL 27 ended the month trading down 2% at $71.
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
Internationally, LNG netback prices ended the month at $21.91GJ – up again 22% from last month. Forecast 2023 netback prices were also up marginally at $20, + 1% on what the ACCC was forecasting in October. Forecast prices for 2024 fell sharply to $18.6 – down 20% compared to October.
Domestic spot gas prices stepped up in November. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $11.4/GJ, a 19% increase from October levels. This is still below the regulated gas price cap of $12/GJ, and also well below the LNG netback price. Prices are 45% below what they were the same time last year.
Gas storage at the key Iona storage facility increased through November. Storage ended the month at 20.35PJ – a 3% increase over the month. Storage remains well above the highest we have seen at this time of year for the past 6 years.
LPG is an important fuel for many large energy users, particularly in areas where reticulated natural gas is not available. The contract price of LPG is typically set by international benchmarks such as the Saudi Aramco LPG – normally quoted in US$ 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 November increased, ending the month at US$133.5/T – a 14% decrease on the October 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.
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 last year is dampening the impact on electricity prices.
Environmental Certificates
The following graph shows environmental certificate spot prices over the last 3 years.
Environmental certificates were mixed through November with rises and falls. ESCs had the largest percentage movement with a 9% fall while both STCs and Spot LGCs dropped by 2%. VEECS increased by 2% while ACCUs had the biggest percentage increase of 5% over the month.
Late in October the Federal Government announced a Capacity Investment Scheme to effectively replace the Renewable Energy Target as the main driver for investing in renewable energy generation. This put downward pressure on LGC prices especially in later years. CAL23 decreased by 1% to $48, CAL24 increased 0.65% at $49, while CAL25 decreased by 1% to $44.5. CAL26 dropped by 0.8% to $37 while CAL27 fell 11% to $28.
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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