Market Changes in April
Australia’s energy industry is venturing significant disruptions and transformations as it transitions from a substantial reliance on traditional fossil fuel sources to a new energy environment.
Recently, the market had settled down since the gigantic hike in 2017 due to closure of Hazelwood coal fired generator in Victoria. Wholesale electricity prices in Victoria and South Australia have risen since the closure of the Hazelwood power station according to the Australian Energy Regulator (AER), with other states in the National Electricity Market (NEM) also affected. With the substitution of Hazelwood’s low cost brown coal generation by higher cost black coal, gas and hydro generation whilst overlapping with rising black coal and gas fuel prices during the period, this has been the underlying driver of the price increase that had hit the electricity market.
Although prices have been trending downwards in all states for April 2018 as seen on the charts in this report (Table A), the volatility still remains within the market.
Electricity Trading Summary for the Week Ending Monday: 23/04/2018
The CY 19 forward curve was mixed over the week. NSW gained $0.23 to $70.15, VIC lost $0.88 to $75.95, QLD rose $0.55 and SA lost $1.71 to $87.87.
Likewise, the spot quarter was mixed over the week. NSW lowered $0.15 to $74.85, VIC dropped $1 to $78.25, QLD gained $1.75 to $64.75 and SA declined by $3.00 to $90.00.
Looking forward to Q2 2018, the curve followed the same mixed trend. NSW lost $0.49 to $70.01, VIC fell $1.25 to $72.25, QLD prices moved up $0.59 to $60.19 and SA dropped $1 to $82.
Factors to watch for Q2 2018 per state:
QLD: Expecting significant solar PV to come on line in the second quarter of 2018. Spot prices in the middle of the day
are expected to be lower when solar generation is at its highest.
NSW: There is more than 650MW of new wind power in coming months. This increase in renewables and is expected to lead to lower average spot price outcomes in the future.
VIC: With a tighter supply/demand balance, the performance of remaining brown-coal generators will be a key influence on spot price levels.
SA: New renewable projects are expected to see an additional 210MW of wind and 220MW of solar capacity during 2018.
Current news on electricity market:
Settlement – settlement based on five-minute energy data and distribution of appropriate data for reconciliation. Bidding – receipt of bids/offers with finer details.