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Energy Market News

Monthly Edition: February 2024

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Loy Yang A trips all 4 units - 13th February causing a significant market price event


Loy Yang A Power Station tripped on the 13th February causing price chaos in both the electricity forward markets and spot market. Loy Yang A is a 2,200 MW Brown Coal Power Station located in Victoria.

Both VIC & TAS spot prices went to the market maximum price of $16,600. VIC held prices at these levels for 2 hours & TAS for just over an hour.

Forward contracts across VIC, NSW & QLD all traded up with Q1 24 VIC contracts trading as high as $83.00 by the end of the day up the low $30's. Most other contracts across the three states all traded up in the "dollars" out to the middle of 2025.

The market softened on the 14th February and most of the forward contracts have returned back to levels prior to the market event.

There is still price risk until the generation capacity fully comes back online but we have seen the market settle.

Market Summary

A strong El Nino summer is quickly evaporating as the Bureau of Meteorology flags a probably return to La Nina for the rest of 2024. While we are still seeing hot days forecasted into February, the heat that occurred in January failed to really impact the electricity market. All states experience hot days during January, only WA experienced any prolonged heat, and this lack of prolonged heat on the Eastern Seaboard has played out in Cal 24 contracts being pushed down, dragging the Cal 25 & 26 forward electricity contracts with them. NSW & QLD did experience some volatility during January, but it was not significant enough to hold the curve up, VIC & SA had minimal spot price volatility and combined with plenty of generation capacity. Both SA & VIC have continued to fall over the period since Christmas. Generators have remained reasonably availability however we have seen some small unplanned outages, these outages have not impacted pricing. This lack of price volatility has pushed the forward contracts lower and unless we see some delayed heat or structural issue the curve doesn’t currently feel supported at these levels. While the curve continues to drop, it is worth considering at what level your business considers suitable to contract for forward periods. Flexibility of contracting is continuing to be popular as it allows faster movement to market if we see any upward movements.

Domestic and international policy announcements likely to impact forward gas prices. Ongoing announcements both locally and internationally, Australian Federal Government announcing another agreement with gas producers to keep gas onshore could be offset by a US Government announcement putting a pause on new LNG developments.

Prices stay stable but with compliance requirements looming and creation numbers bouncing around could see trading levels increase. Prices have continued to drift however with February being compliance month for LGCs & STCs we might see some volatility return to the market. Energy Efficiency certificates (VEECs & ESCs) will be impacted by weekly certificate creation numbers, VEECs volumes are strengthening while ESCs are staying low.

ACCU’s still feeling strongly bid and with looming regulatory changes, 2024 should see an increase in the volumes traded and a strong probability of prices increases.

Source: Utilibox Energy Contract Price Index, using contract prices from Energy Action’s Reverse Auction platform. The index averages these contract prices - providing insight to pricing trends rather than specific contract price levels.

Electricity Contract Market 

All NSW contracts closed the month down after a brief rally in mid January. After the threatening volatility seen in mid January failed to eventuate the Cal 24 NSW contracts have pushed down quickly and mercilessly.

The Cal 25 & Cal 26 contracts mirrored this fall in the in late January into early February and there doesn’t appear to be any support from the buy side for these contracts. A final decision on Eraring Power Station (currently still in limbo) will be the main price impact we are likely to see (outside of any generator fails – unplanned outages). With the BoM announcement last week indicating a potential switch back to La Nina it is likely price will be driven by physical issues and not weather. Cal 27 contracts still do not have enough liquidity to show any real direction.

Recommendation. NSW longer dated contracts (Cal 26 & 27) still have a large premium built in and look over-valued. The Cal 25 also has premium built in but is moving downward, Cal 25 should be considered as a buy if clients are looking to lock in year-on-year savings (Cal 25 being lower than their Cal 24 contract) but unless we see some major heat volatility, the Cal 25 should continue to drift.

QLD Cal 24 contracts have softened dramatically compared to previous weeks as price events in the state have not eventuated.  Cal 25 contracts have also fallen considerable and are trading well below the Cal 24 contract. Cal 26 & 27 are also well below Cal 24 but running at a small premium compared to Cal 25. The contracts currently do feel as though there should be a larger value on the discount between the curves and has the potential to continue to soften.

Recommendation. QLD contracts continue to still be the most at risk, with ongoing generational capacity availability in the current quarter (Callide C returning late and Millmerran having an unplanned outage). It is worth considering whether long time budget certainty at these levels is attractive.

VIC contracts having the feeling that unless we see some physical supply issues they will continue to drift, Q423 VIC spot averaged in the $20’s showing the market that without any volatility pricing can go low still. The Cal 25, 26 & 27 contracts are all reasonable flat, while they are presenting a premium over the Cal 24’s the overall value is trending downward.

Recommendation. If the market continues to behave as it has (there is no market issues now to change this mindset) the Cal 25-27 have more value to shed and have the potential to fall into the mid $50’s, in the mid $50’s for Cal contracts this presents good value and should have year on year savings compared to the Cal 24 at time of contracting, VIC contracts are a “hold”.

SA Contracts are harder to make a clear prediction, a lack of liquidity in the SA market often leads to gapping (large increases or decreases) in value as the market re-assesses the price level. Current SA contracts are falling across the curve and continue to soften.

Recommendation. Due to the lack of liquidity SA customers should be considered on a case-by-case basis and Cal 25 & 26 contracts should consider closer inspection. They do have some premium built in over the Cal 24, but all contracts are at the lower end of their recent value levels.


ASX Baseload Futures Prices

Latest data available from Utilibox

Our Key Message

A shift in the Bureau of Meteorology’s forecast and no real electricity price events has pushed the forward contract markets to lower levels. A potential return to a La Nina forecast for the rest of 2024 and no real heat events have impacted forward contract prices, all states have seen softening in their forward contract markets.

Federal Government continues gas intervention policy, flow on impact yet to materialise. The Federal Government continues to make inroads in securing supply, other market factors may impact pricing. International markets will again play a strong role in gas pricing in 2024.

January Price Dynamics

New South Wales

A small amount of price volatility in mid to late January put some pressure back into the contract markets. This volatility was minimal, and the expected hot weather didn’t eventuate, the curve was been pushed back down strongly in late January.


A clear lack of heat and volatility has continued to put downward pressure on the VIC contracts. Plenty of available generation has reinforced this topside pressure.


QLD contracts did show some signs of running away (upwards) from high expected pricing and weather events. While the weather events occurred, this was not reflected in contract prices and the curve has retraced back.

South Australia

SA contracts dropped significantly during the month; a lack of spot price volatility combined with some over-priced contract levels resulted in SA contracts being shunted down across January.

Electricity Spot Prices.

Minimal heat events and plenty of rain in the north are keeping price volatility to short spikes.

December prices were all softer except the rain-soaked Queensland.  Large volumes of rain across the period combined with a less than expected number of hot days across SA & the East Coast has kept prices subdued and showed minimal levels of volatility

January prices lift.  January prices showed signs of recovering with more volatility and some capacity issues. January had more hot days and higher levels of volatility compared to December, however the price events were short-lived and did not add significant value back into the curve. Some plant availability issues, and the NSW/ QLD interconnector constraining decreased available supply but like the weather this did not play out in large swarths of pricing events.

Weather across the past two months and leading into February has been varied. Overall weather has been less volatile than originally forecasted. While we have seen some very hot weather other than Perth it has only been a day here and there, Perth is the only capital to experience prolonged periods of heat. QLD has experienced cyclonic activity bring plenty of rain and a lot of humidity propping up demand. The BoM has also provided a media release indicating a strong possibility of a return to La Nina for the rest of 2024.

Monthly Average Spot Price

All figures in $/MWh as of 6th February. Latest data available from Utilibox

Australian Gas Markets.
Federal Government continues intervention policy, flow on impact yet to materialise.

Latest data available from Utilibox

The IEA (International Energy Agency) has flagged that Global gas demand will rebound in 2024 - combining this with limited new LNG production will add pressure to global prices, potentially impacting domestic pricing again.

Global gas demand set for stronger growth in 2024 despite heightened geopolitical uncertainty - News – IEA

The US Government has put a pause on new LNG development approvals  - The US was on track to become a top 2 global LNG exporter (with Qatar), this pause is likely to put pressure back on Cal 25 pricing.

Beach Energy has also signed a deal with Origin Energy which includes “moderate” price increase, the market was expecting a significant price increase – this should help put downward pressure of forward gas prices.

Santos has also increased the overall expected cost of its Barossa Gas project & delay the time gas will be available from early 2025 to the second half of 2025. The delay and the cost are less than what the market was expecting.

Overall, the US issue is likely to put upward pressure on the Cal 25 gas price curve, Beach and Santos announcement while increasing costs and delaying supply, it is less than what the market is expecting so should help offset some of the US price pressure.

The Federal government also announced another tranche of domestic gas being available through a deal done with Esso & Woodside.

All states returned higher prices in January compared to December, more demand across industry and power generation held up pricing.

AEMO’s WA GSOO (Gas Statement of Opportunities) for 2023 forecasts continuing tightening of the state’s demand/supply mix. AEMO is projecting the market available gas to be up to 105 PJ short of domestic demand up to 2026.

Environmental Certificate Markets.
Trends, Pressures, and Regulatory Shifts

Small Scale Technology Certificates (STCs)  have become stagnant over the past couple of months. While spot STC’s are trading at $39.30 and haven’t moved off this level we did see an interesting trade leading into the compliance period. Some Cal 23 vintage STCs traded in late January at $39.70. Minimal trading activity outside of the spot market.

Large Generation Certificates (LGCs) are now well established below $50.00. The market has seen some volume go through across the spots and forward dated trades, Cal 23 vintage LGCs like the equivalent STC is commanding a small premium. Longer dated contracts are still backwardated but that level of discount is continuing to shrink. Longer dated markets closer to the 2030 deadline we are seeing levels still below $20.00 per certificate.

Latest Spot Trade

Latest data available from Utilibox

Large Generation Certificates (LGCs) forward markets we are now starting to see more trades go through up to Cal Year 2030 (Cal 30). In the below chart we can see that the curve while still backwardated the level of this backwardation is starting to flatten, meaning the longer dated prices are rising quicker than the short-dated certificates.

Victorian Energy Efficiency Certificates (VEECs) stalled across December/ January finding a barrier at $96.00. January saw a couple of trades at this level. Short-term drivers in the VEEC market is the weekly certificate creation numbers, this helps to understand what is happening from the supply side. Weekly certificate creation numbers were slow through the first half of January however weekly numbers have ramped up leading into February. Significant increases in certificate creation will help add supply side pressure back onto the VEEC price.

Energy Saving Certificates (ESCs) continue to be a polar opposite to the VEECs. ESC prices are depressed and currently sitting below $24.00, a lack of trading has kept them at these levels. However, as with the VEECs, weekly certificate creation numbers are a driving force on what is happening in the market, certificate creation in 2024 so far has been lower than previous years, this has the potential to put upward pressure on the market if the volumes remain at these low levels.

Australian Carbon Credit Units (ACCUs) quiet period over recent weeks, with minimal volume of trades going through. We are now seeing a splitting in price between the different methodologies of ACCU being created. Generics ACCU’s are sitting flat at $35.00; while HIR (Human-Induced Regeneration) ACCUs are still valued at a premium closing the month at $37.50. The Method Specific ACCUs traded late in the month with Savanna Burning certificates trading at $35.25.  Method Specific certificates do have a range depending on the certificate creation methodology - Ranging from Agricultural method ($31.25) to Environmental Planting $60.00).

ACCU’s in 2024 will become a stronger focus as government puts more focus on the governance landscape, Mandatory reporting launches.

Appendix – New South Wales Baseload ASX Futures

Latest data available from Utilibox

Appendix – Victoria Baseload ASX Futures

Latest data available from Utilibox

Appendix – Queensland Baseload ASX Futures

Latest data available from Utilibox

Appendix – South Australia Baseload ASX Futures

Latest data available from Utilibox

Appendix – Baseload ASX Futures

Calendar Year 2024

Latest data available from Utilibox

Appendix – Baseload ASX Futures

Calendar Year 2025

Latest data available from Utilibox

Appendix – Baseload ASX Futures

Calendar Year 2026

Latest data available from Utilibox

Appendix – Baseload ASX Futures

Calendar Year 2027

Latest data available from Utilibox

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