Mar-23 Energy Market Report

Mar-23 Energy Market Report

March continued where February left off, with a softening forward electricity prices, gas prices, and LGC prices. But that all turned around in the last week of March with electricity, gas and LGC prices rallying strongly.

The turnaround coincided with news of:

  1. low rainfall outlooks and a possible El NiƱo event leading into next summer
  2. further delays to the return of Callide C3 and C4 units as well as the voluntary administration of its 50 percent owner Genuity Group;
  3. AMEO's Gas Statement of Opportunities forecasting short and long term gas supply gaps, although the potential shortfall for the forthcoming 2023 winter is disputed by some gas producers;
  4. OPEC announcing a reduction in oil production;
  5. ExxonMobil warning of falling gas production;
  6. the closure of Liddell Power Station approaches by the end of April.

1.0 Overview

The highlights of the month are:

  1. On average, wholesale electricity spot prices rose during March with high price volatility seen particularly in Qld and NSW during some late summer heat waves. The price volatility during March pushed Qld and NSW Q1-23 average spot prices above $100/MWh. Vic had the lowest Q1-23 average price with $56/MWh, suffering just one day for the quarter on 16 Feb with extreme price outcomes
  2. Total energy consumption for NSW was the highest in seven years during the warmest March on record. NSW maximum scheduled demand was also the highest on record for March at 13,170MW. Vic and SA both had a mild March with maximum demand 15% lower than the same time last year in Vic, and 8% lower in SA
  3. The weather outlook shows maximum temperatures are likely to be above average for most of Australia over the coming three months, while the rainfall outlook is showing a high chance of below-average rainfall for most of the country
  4. Generator offers were lower from black coal and hydro generators during March, while more capacity was offered by gas-powered generators
  5. The new generation revealed two new utility-scale solar farm connections during March bringing the Q1-23 new generation total to 766MW
  6. Generation market share shows less generation from coal generators and big increases in market share for solar generation. SA wind generation market share was less compared to the same time last year, while wind generation in Tas increased to almost 20 percent of all generation
  7. Baseload outages were significantly lower in NSW during March, but higher for Qld and Vic compared to recent years
  8. Wind generation curtailment was significantly higher in NSW, Vic and SA. Solar generation curtailment was the second highest on record for Vic at 35%, with Qld, NSW and SA also experiencing high levels of curtailment for March
  9. Snowy Hydro water storages continue to decline and are now below 60%, which remains the highest level for March since 2012. Hydro Tas storages remain around 38%
  10. Wholesale electricity forward prices rallied late in March following many months of softening prices. NSW closed with the highest FY-23/24 price at $144/MWh while Vic and Tas were the lowest at around $95/MWh
  11. Average wholesale gas spot prices for March rallied late in March to a close just below $14/GH
  12. After reaching a floor of $42/certificate in February, LGC spot prices rallied during March, climbing $5/certificate to a close of $49/certificate
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