Australia Energy Market Report - May 2017


Pricing: Pricing declined in NSW by 7.1%, 8.8% and 5.4% respectively for calendar years 2018, 2019 and 2020. In Victoria, pricing declined by 3.0%, 5.6% and 2.9% for the same periods. Pricing declined in Queensland by 5.1%, 5.0% and 2.8% respectively for calendar years 2018, 2019 and 2020. South Australian pricing was relatively flat.

Market Uncertainty: AGL’s chief executive has gone on record saying that AGL sees renewable energy backed by gas generation as the future for Australia and that it is a lower cost option than new clean coal plants. It is clear that if wholesale prices are to be reduced, there needs to be a lot more investment in new generation and that will only happen if there is market certainty.

Market uncertainty started when the Liberals abolished the carbon tax and tried to wind back the Renewable Energy Target. Clear long term government policy with support from other parties is what is being sought by investors. It is widely believed that this would eventually lead to lower prices.

Demand Response: The AEMO is paying increasing attention to demand response after forecasting shortages in reserve capacity during peak times next summer in Victoria and South Australia. Large users have been approached and offered incentives to reduce demand at critical times. The financial incentives can be substantial if demand can be reduced and this plays an important part in the AEMO’s plan to ensure that sufficient generation is made available.

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