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Energy Action

Energy Market Wrap

Monthly Edition Released: 1 November 2022

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    Electricity Contract Market

    Contract market prices have dipped again and are now trading almost 30% below the highs set earlier this month.

    For consumers deferring contracting, this represents an opportunity to return to market to secure lower pricing.

    Electricity markets moved lower due to higher output from baseload generation and increasing media attention on energy prices.

    This trend occurred across all state markets except for SA where there is a greater reliance on renewable generation, that was impacted by the lose of 350MW of capacity from Hydro Tasmania.

    While current market conditions indicate this dip in pricing is unlikely to continue, we recommend taking advantage of short-term dips to secure 2024 and 2025 retail supply agreements.

    The Victorian electricity market followed a similar trend to that of NSW and QLD.

    Prices dipped by over 25% for Cal23 and almost 30% for cal24, providing an opportunity to enter contracts on price weakness.

    South Australian electricity prices remain in strong uptrend with the price for Cal23 currently trading at $210/MWh, $185/MWh for Cal 24 and $175 for Cal25.

    Energy Policy Outlook and International Markets

    While recent media attention focused on cost of living and energy prices, the attention is directed towards the residential market, with comments indicating some form of price regulation rather than structural reform.

    In the short term, energy pricing is dependant on the Government providing the settings to address the underlying causes of current market pricing (reliability of baseload generation and domestic gas reservation).

    International factors continue to influence domestic energy costs with coal prices at record highs.

    Global influences on gas prices appear to be easing with European demand expected to decline in response to increased storage levels and milder winter conditions expected during the European winter.

    Electricity Spot Market

    Monthly Average Price Trend

    • Wholesale electricity spot prices continued their decline from last month in SA, TAS and VIC.
    • Electricity spot prices increased in NSW and QLD by approx. 30% in response to a decline in capacity from Tasmania Hydro.
    • Spot prices are expected to trend higher over the 2023 summer period.

    Generation by Fuel Type

    The following chart shows the proportion of electrical generation, by fuel type, during the month of October 2022.

    Approximately 4.3% of electricity generation was sourced from gas-fired facilities, down from an average of 8% during the prior quarter.

    There was also a change in the mix of renewables with greater solar output, offset by a decline in wind generation compared to last month.

    Baseload generation increased to over 61% of supply compared to the prior month. 

    Source: Open NEM

    Gas Market

    Wholesale domestic gas prices have fallen since their highs in July. Spot prices trended back towards $10/GJ during October, while the annual average spot price was around $20/GJ.

    • Contract prices remain well above the average spot price but have decreased slightly since July:
      $28/GJ for Cal23 supply agreements,
    • $25/GJ for Cal24 and
    • $20/GJ for Cal25

    European demand remains the key influence on domestic gas pricing, which has eased since last month, due to increased storage levels and a milder European winter expected.

    Environmental Certificate Market

    Latest certificate prices are:

    • LGCs traded higher to $57.15/ certificate
    • ACCU’s traded higher to $28.75/ certificate
    • VEEC prices traded higher at $68.00/ certificate
    • ESCs traded flat at $33 /certificate
    • STC’s continue to trade just below the retail price cap at $39.90/ certificate.

    LGC Futures Market

    LGC prices represent the cost of renewable electricity.

    LGC prices continue to move in-line with the movements in the price for electricity.

    • 2022 LGC’s remain just below recent highs at $65/certificate
    • LGC prices continue to rise across the entire forward curve with greater volumes now trading towards the end of the RET scheme in 2030
    • Calendar year 2029 LGCs traded at $20.00/certificate
    • Calendar year 2030 LGC’s traded at $18.55/certificate

    ACCU Futures Market

    ACCU represent the cost of offsetting the carbon associated with energy use (such as gas and liquid fuels).

    Prices rose slightly for 2022 certificates after recent downward pressure and are currently selling for $30/certificate.

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