Our Annual Market Report has been divided into 3 parts, and this is the first part focusing on Spot Prices. Trends and insights have been drawn, displayed using engaging interactive charts.
This year, we have divided our Annual Market Report into 3 parts to try to keep each part bite size. This is the first part and focusses on Electricity Spot Prices while the other parts will be Generation & Demand and finally Financial Markets (power and environmental certificates). These other parts will be released over the next week or two.
As can be seen by the Table of Contents, we begin recapping the history of prices to set the scene, before undertaking further analysis of looking at the Risk-of-Change, Price Distributions, Pricing Bands, Negative Prices and Intraday Price profiles. This analysis is followed by highlighting the key movers and shakers setting the price, the reliability of daily pre-dispatch forecast prices and then a recap of increasing ancillary market costs.
1.0 Overview
A summary of year outcomes are:
- Spot prices were exceptionally high in QLD led primarily by the Callide C catastrophic failure in late May 2021. Other than QLD, NSW also carried most of the over-shocks leading to a strengthened annual price outcome
- The average annual price for VIC was the lowest since 2015 and and SA equalled the median price since 2001, while TAS had the 3rd lowest on record
- Spot prices in 2021 had a much higher Risk-of-Change than 2020 with the potential to rally upward further
- Spot volatility increased across all regions, but particularly in the northern States of NSW and QLD
- The proportion of negative prices surged in SA, VIC and TAS and impacted the average prices accordingly
- Intraday price trends previously identified continued to play-out with SA being the 'yellow canary' in the NEM, leading the way
- Black coal set prices less often and the gap was taken up by Hydro in higher price times and then Brown Coal with Solar in the low price periods
- All 3 dominant Price Setters of 2020 lost market share in 2021, with Origin having the most significant reduction
- The Price Setter Ratio is a measure of competition and during 2021 QLD, VIC, SA experienced a slight increase, while NSW and TAS decreased. Looking at the Price Setter Ratio when prices exceeded $300/MWh, the Ratio deteriorated for all regions except for TAS suggesting less competition during high price events. Snowy Hydro was the dominant Price Setter for prices above $300/MWh in all mainland Regions
- When pre-dispatch prices issued at 8:00am are studied, it was found that the number of half hours expected above $300/MWh almost doubled in 2021 and had a higher conversion rate to occurring than 2020. There were also twice as many unexpected prices exceeding $300/MWh in 2021 than 2020
- Ancillary Services costs soared setting a new record, mainly driven by a substantial increase in Queensland, while SA had a profound decrease. The 6 Second Raise and 60 Second Raise services continued to dominate
2.0 Historical Prices
Spot price history is first summarised across all Regions for the last 3-years, before showing a longer history by Region. The second section outlines the monthly price history since January 2020.
