The National Electricity Market
October saw large decreases again in the wholesale spot prices in all States apart from TAS. SA prices decreased 63% to $15/MWh while NSW and VIC both fell 35% to $42 and $17 respectively. QLD decreased 27% to $37/MWh. TAS was the only State to increase prices – up 41% to $37/MWh.
Electricity Generation Mix
Total grid-scale generation for October increased by 1.1% from September levels, though adjusted for the extra day in the month there was a small decrease. Milder weather and longer sunshine hours, resulting in increased rooftop generation (not included in grid scale generation), will have contributed to this reduction.
Wind generation was up significantly with windier, equinox weather while utility solar generation didn’t increase as much as expected, potentially due to a greater amount of curtailment. Gas generation was the biggest loser with 26% less generation over the month while hydro also was down.
Gas Generation
Gas generation decreased again in October - down a further 26% from September levels. Compared to 12 months ago gas generation was 46% lower than it was in October 2022, and it is at the lowest level it has been in the last 10 years.
Gas generation decreased in all States - VIC (-84%), NSW (-52%), TAS (-37%), SA (-29%), and QLD (-12%).
Hydro Generation
Hydro generation decreased 6% in October compared to September levels and was below the 8-year average as shown below.
Storage in Hydro Tasmania’s lakes remained at much the same levels through October. Storage ended the month at 6,938GWh (48% full), an increase of 20GWh over the month. This is 9% more than the same time last year and well above the average level for this time of year as shown in the following chart
Snowy Hydro’s storage was flat during October. Snowy finished the month 62% of full (3,302Gl) – up 0.4% over the month. Levels are at the top of the range observed over the last 8 years as shown in the following chart.
Climate outlook overview (from BOM)
November to January rainfall is likely to be below average across much of western, southern and northern Australia.
November to January maximum and minimum temperatures are very likely to be above average for almost all of Australia.
November to January 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 November to January 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 October was 6,490GWh – up 14% on last month and up 33% on October 2022. This was a new record for monthly renewable generation, though this record may be short-lived with November and/or December likely to better this. Wind generation was up 15% on September and up 21% compared to October last year. Utility Scale Solar generation was up 3% from September levels and up 40% 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 fell in October for all calendar years - CAL24 was down 10% at $107, CAL25 was down 5% at $116, while CAL26 closed at $120 - down 7% over the month. CAL 27 started trading at the beginning of October – it fell 5% over the month to $124.5
Calendar Year Contracts for New South Wales
QLD prices had similar changes to NSW, down 8% at $97 for CAL24, down 5% in CAL25 closing at $94, and CAL26 finishing down 5% at $91. CAL 27 was also down 1% at $91.
Calendar Year Contracts for Queensland
VIC futures prices repeated the downward trend of NSW and QLD. CAL24 closed down 6.5% at $71, CAL25 was down 3% at $69.5 while CAL26 was down 7% closing at $70. CAL 27 ended its first month trading down 13% at $72.
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
LNG netback prices ended the month at $17.99GJ – up again, 8% from last month. Forecast 2023 netback prices were also up at $19.78 – + 2% on what the ACCC was forecasting in September. Forecast prices for 2024 are now sitting at $23.3 – up 15% compared to September.
Domestic spot gas prices increased slightly in October. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $9.6/GJ, a 3.5% increase from September levels. This is still well below the regulated gas price cap of $12/GJ, and also well below the LNG netback price. Prices are 52% below what they were the same time last year.
Gas storage at the key Iona storage facility decreased through October. Storage ended the month at 19.8PJ – a 4% 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 October reduced significantly, ending the month at US$117.5/T – a 24% decrease on the September 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.
Almost all environmental certificates were flat through October. Spot LGCs were the only significant mover with an 8% decline in prices following on from other recent falls.
During October we saw a continuation of the reduction in the gap between vintages of LGCs that we have observed in recent months. CAL23 decreased by 7% to $48.75, CAL24 dropped 6% at $48.6, while CAL25 increased by 1% to $45. CAL26 dropped by 4% to $37.5 while CAL27 jumped 14% to $31.5.
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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