The National Electricity Market
September saw large decreases in the wholesale spot prices in all States. SA prices decreased 74% to $41/MWh reversing last month’s significant increase. NSW averaged close to $65/MWh (31% decrease) while QLD decreased 25% to $51/MWh. VIC prices fell 59% to $26/MWh and TAS decreased 29% to $27/MWh.
Electricity Generation Mix
Total grid-scale generation for September decreased by 12.4% from August levels. Milder weather and longer sunshine hours resulting in increased rooftop generation (not included in grid scale generation) will have contributed to this reduction as well as there being one less day in the month.
Solar generation increased significantly in September while wind generation was flat (increased per day based on less days in the month). Hydro, gas and coal reduced substantially over the month.
Gas Generation
Gas generation decreased in September - down 41% from August levels. Compared to 12 months ago gas generation was 29% lower than it was in September 2022.
Gas generation decreased in all States - NSW (-75%), SA (-44%), VIC (-35%), TAS (-30% on very low numbers) and QLD (-24%).
Hydro Generation
Hydro generation decreased 25% in September compared to August levels and was below the 8-year average as shown below.
Reasonable inflows and reduced generation pushed water storage levels in Hydro Tasmania’s lakes to close to 8-year highs through September. Storage ended the month at 6,918GWh (48% full), an increase of 275GWh over the month. This is 21% more than the same time last year and close to the 8-year maximum level as shown in the following chart.
Snowy Hydro’s storage increased during September. Snowy finished the month 66% of full (3,518Gl) – up 7.4% 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)
October to December rainfall is likely to be below median for much of Australia.
October to December maximum temperatures are at least 3 times as likely to be unusually warm for most of Australia.
October to December minimum temperatures are very likely to be above median almost nationwide.
The long-range forecast is influenced by several factors, including 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 September was 5,713GWh – up 14% on last month and up 22% on September 2022. Wind generation was unchanged in September and up only marginally (1%) compared to the same month last year. Utility Scale Solar generation was up 13% from August levels and 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 were again quite steady in September for all calendar years - CAL24 was down 3% at $119, CAL25 was up 1% at $122, while CAL26 closed at $129 - up 3% over the month.
Calendar Year Contracts for New South Wales
QLD prices had similar modest changes, down 2.5% at $106 for CAL24, increasing 4% in CAL25 closing at $99, and CAL26 finishing up 3.5% at $96.
Calendar Year Contracts for Queensland
VIC futures prices again only had minor changes over the month. CAL24 closed down 3% at $76, CAL25 was down 2% at $72 while CAL26 was up 1% closing at $75.
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
After their recent falls, global energy prices flattened out and were quite stable in September. They continue to be at levels above what we would have considered to be high only 2 years 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 ended the month at $16.63GJ – up almost 20% from last month, however forecast 2023 netback prices are $19.78 – down 2% on what the ACCC was forecasting in August. Forecast prices for 2024 are now sitting at $20.27 – down 14% compared to August.
Domestic spot gas prices decreased in September. The following graph shows the 30-day rolling average price at Wallumbilla gas supply hub – ending the month at $9.3/GJ, a 16% decrease from August levels. This is well below the regulated gas price cap of $12/GJ, and also well below the LNG netback price. Prices are 55% below what they were the same time last year.
Gas storage at the key Iona storage facility increased through September. Storage ended the month at 20.65PJ – a 8% increase 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 September were flat, ending the month at US$155/T – a 0.6% decrease on the August 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.
After recent increases, VEECs flattened out in September, falling by 1% to $85.5 per certificate. Spot LGCs fell a further 4% to $52 per certificate. ESCs reversed last month’s drop, rising 6% to $27 while ACCU’s also climbed to 30.35 – up 3%. STCs were flat at $39.8 per certificate.
During September future dated LGC certificate prices decreased for the first few years, but increased markedly for later years. CAL23 decreased by 4% to $52.5, CAL24 dropped 2% at $51.5, while CAL25 decreased by 1% to $44.5. CAL26 jumped by 15% to $39 while CAL27 increased 9% to $27.5.
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/
Disclaimer
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