May-23 Energy Market Report

May-23 Energy Market Report

May-23 was a story of increases across the energy market. Electricity spot prices were the highest year-to-date for all mainland NEM regions, forward electricity contract prices rallied across the NEM, and ancillary services costs for May were the highest year-to-date.

In the east-coast gas market, spot prices soared from $12/GJ in Apr-23 to around $18-$20/GJ for May-23, despite softening prices in the Asian and Euro gas markets. LGC prices also continued on their 3-month rally, closing the month at $58/certificate.

A number of factors may have contributed to price volatility during May including: it was the first month in more than 50 years that the Liddell Power Station didn't send power to the NEM, SA and NSW struggled with low levels of wind generation, average temperatures in Qld and NSW were the lowest for May on record, record high maximum demand for May in Qld and SA.

1.0 Overview

The highlights for the month are:

  1. Electricity spot prices were elevated during May. SA experienced extreme prices on 4 May on a day when wind generation was extremely low. May-23 also had the lowest wind generation for SA in two years resulting in an average price for May-23 of $198.29/MWh. The May-23 average price for NSW was also very high at $193.99/MWh. Generation from variable renewable energy sources in NSW during May was at its lowest level in two years, resulting in higher generation from coal and gas. It was also the coldest May in NSW in more than 10 years, with the highest total energy consumption for May in a decade
  2. Total energy consumption was higher compared to the same time last year for all regions except Qld. Maximum scheduled demand was 11% higher than the same time last year in SA, around 2-3% higher in Qld and Tas, while maximum demand was significantly lower in NSW and Vic compared to the same time last year. Maximum demand was a record high for May in both Qld and SA
  3. Average temperatures were considerably lower during May for Qld and NSW compared to recent years, While temperatures were at average levels for May in Vic, SA and Tas
  4. Generator offers changed during May with more capacity offered from gas-powered generators and less capacity from hydro generators, with both technologies offering more capacity below $300/MWh, the highest since mid last year
  5. New Generation for May included the 60MW Riverina Energy Storage System 1 owned by Shell, and the 65MW Riverina Energy Storage System 2 owned by EnergyAustralia
  6. Coal generation market share in Qld fell to 59% in May, NSW black coal market share increased in May to 69%. Vic brown coal market share increased compared to the same time last year. SA gas market share increased in May as wind market share fell to the lowest level for May since 2017. Tas wind market share was the highest on record for May at 17%
  7. Baseload outages were considerably lower for NSW compared to the same time in recent years, and average levels for Qld and Vic
  8. Wind generation curtailment was the highest level in recent years for Vic at 6.4%, while SA was the lowest for the same period at 6%. Solar curtailment was the highest level for Vic in the past 4 years, and lower for Qld, NSW and SA
  9. Water storage levels remained at prudent levels which were higher than levels seen in past years for both NSW and Tas
  10. The Electricity forward market continued to climb in May with all tenors reaching their highest price levels for 2023 year-to-date
  11. Gas spot prices soared during May with an average east coast gas price of almost $19/GJ for the month
  12. LGC spot and forward prices continued to rally during May, the spot price climbing over $5/certificate to $58/certificate
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