EnergyByte

Electricity and gas spot price volatility intensified in June. The portion of electricity spot prices around $300/MWh swelled pushing average monthly prices beyond $150/MWh. Average daily gas hub prices hit $28/GJ in Sydney and Melbourne after AEMO announced a gas supply risk for the coming months.

May was marked by extreme price volatility in NSW where the CPT was exceeded on 8 May triggering Administered Pricing, while low wind generation contributed to high average spot prices in the southern states despite lower demand levels. Gas spot prices soared averaging above $13/GJ for all regions.

Spot prices strengthened in April with a very high portion of price outcomes between $100 to $300/MWh pushing the NEM average April price to $85/MWh compared to $75/MWh for Q1-24. Forward prices significantly rallied during the month. Gas spot prices also strengthened but averaged just below $12/GJ.

Based on our probabilistic spot forecast for Q2-24, we recognised that the forward market was likely to be under-valued. As events have played-out, this proved to be true and the market rallied, not only for Q2-24, but through the whole forward curve.

The electricity forward market rallied in the southern states as news of potential gas shortages for Victoria circled in the media. Q1-25 traded most heavily during the quarter, especially for QLD which remains stubbornly high despite the return of Callide C3 and the expected return of C4 this July.

March was the least eventful month for Q1-24, with lower spot prices for most of the month apart from a Labor Day long weekend heatwave for VIC and SA, and some oppressive humidity hitting QLD later in the month. Both occasions coincided with low levels of VRE resulting in high price volatility.

In February VIC and SA solar farms had a big uptick in weighted average prices. Wind weighted average prices were also higher for all regions except QLD. VIC maximum generator outages were exceptionally high due to the Loy Yang A outage caused by a forced trip on 13 Feb.

Summer finally arrived for the southern NEM states, forcing Victorian transmission lines to topple on 13 Feb and when combined with the extreme heat, resulted in significant price volatility. The FCAS market in SA also experienced volatility on 13 Feb, racking up more than $6m in costs.

Forward prices rallied in QLD and NSW during February as a result of strong demand and high spot prices. VIC prices were affected by the massive power outage on 13 Feb with the Q1-24 price jumping $20/MWh. In contrast, SA forward prices continued to free fall with all tenors approaching $80/MWh.

For the first time in years, VIC wind farms generated at a premium to the spot price while SA wind farms were very close to generating at a premium due to very low spot prices. The news of the early closure of Snuggery and Port Lincoln Power Stations was also a notable development in January.

Hot and muggy weather in the north and mild weather in the south made for two very different stories in the electricity spot market during January. In the north, QLD recorded its second highest January average spot price while down south, Victoria had record low levels around $22/MWh.