The Australian energy market continued to recover during 2023 from the extraordinary global energy crisis it faced in 2022. Electricity and gas spot prices softened but remained high compared to pre-2022 levels.
Our Annual Market Report has been divided into 3 parts. This part focuses on Spot Prices where trends and insights have been drawn and displayed using engaging interactive charts. The other parts will be Financial Markets (power and environmental certificates) and finally Generation & Demand which will be released shortly.
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 Risk-of-Change, Price Distributions, Pricing Bands, Negative Prices and Intraday Price profiles. This analysis is followed by three more sections covering Extreme Price Prediction, Ancillary Service Costs, and finally Gas Market Prices.
1.0 Overview
This section summarises the key outcomes for 2023.
- Average spot prices tended to soften throughout 2023, following a record 2022 where the energy crisis pushed electricity and gas spot prices to record levels. QLD and NSW average spot prices of $90.67/MWh and $95.94/MWh were the highest in the NEM and were the second highest for their respective regions following records set in 2022. SA spot prices were the most volatile throughout 2023 averaging $80.06/MWh. VIC and TAS average prices were significantly lower at around $55/MWh.The risk-of -change in the spot price was significantly lower in 2023, with VIC and TAS showing a bias for higher spot price outcomes, QLD and NSW for lower prices, and SA showing a high sensitivity for both upward and downward price movements.
- Spot volatility was significantly lower than 2022 for all regions, but remained higher than historical levels. SA was the most volatile region with a gap of $20/MWh between the average and median spot prices, and a gap of over $500/MWh between the 1st and 99th percentile of prices.
- Spot price outcomes between $100 and $300/MWh represented the highest portion of spot prices for all mainland NEM regions, while prices in the $50 to $100/MWh price band had the largest share in TAS.
- The intraday price trends during 2023 continued to be for rising overnight prices, softening daytime prices, and stronger and more volatile evening peak prices.
- Extreme price alerts returned to normal levels in 2023, but remained higher than pre-2022 energy crisis levels for all regions, although TAS alerts were lower compared to the 2016-2019 period.
- Ancillary service costs for 2023 were at the lowest level in seven years with a total of $145m. VIC had the highest total FCAS costs with $39m.
- Domestic gas hub prices fell from record highs of around $20/GJ in 2022 to around $12/GJ in 2022.
- Total LNG Export Flows were 1.3m TJ during 2023, the second-highest level for the past five years. Total LNG Exports from the Port of Gladstone for 2023 were 22.8m tonnes.
