Apr-21 Energy Market Wrap

Apr-21 Energy Market Wrap

It almost appears spot power prices have been vaccinated from the "low spot price virus" and therefore recovered during April, except for Tasmania. Forward power prices continue to march upward, although remain relatively low in a historical context. Environmental certificate prices also rallied, while a slowdown occurred with solar PV installations and new renewable grid scale supply. Hydrogen projects flourished across Australia, with a few drawing financial support.

Heaps more, so read on ...  and this is our Wrap version, while the full version is available via subscription from here.


Electricity Spot Prices

Prices have strengthened during the month and we have shown:

  • monthly trends with mainland States experiencing average prices in the $50-$55/MWh range, while Tassie averaged about half the other States driven by strong run-of-river generation and increasing wind generation for April
  • a historical comparison of April spot prices with all States re-bounding, except Tassie
  • Risk-of-Change measures showing Queensland spot prices could have easily been softer, while VIC could have easily changed either up or down
  • the distribution of half hour spot prices with Queensland having a pronounced number of half hour prices in the $300 to $5,000/MWh price range
  • how the proportion of negative prices has decreased, but Tassie set a record
  • the intraday prices continue the trend of lower daytime prices, a stronger and more volatile peak prices, and finally stronger dark hour prices
  • Price Setter trends where AGL continues to be dominant, and Origin has become less active

Generation

  • capacity increased with Gangarri Solar Farm (120MW) coming online in Queensland
  • due to softer demand, generation was lower across the NEM and hydro generation stepped up particularly driven by Tasmania
  • wind and solar generation weighted average prices continue to struggle
  • outage levels were the highest April over the last 3-years

Consumption and Demand

  • operational consumption increased for VIC and NSW, whilst the other States were more consistent
  • little differences occurred over Easter 2021 and 2020 periods

Forward Prices

  • prices rallied during the month for all forward years
  • the next 3-years of forward prices are relatively low, but are not necessarily setting records

Generator Behaviour

  • Stanwell in QLD, reversed their trend of shifting capacity from lower price bands to higher price bands
  • Snowy Hydro (NSW) shifted capacity into higher price bands
  • Origin (VIC) continues to only offer high price capacity from the gas-powered Mortlake
  • AGL (SA) increased capacity in the below $100/MWh price bands
  • HydroTas offered more lower price capacity and Tasmania became a net exporter for the first time in nine months

Weather

  • BNE and SYD had cooler temperatures, while MEL, ADL and HBA had similar weather patterns
  • the weather outlook prepared by the BoM for the next 3-month shows warmer temperatures across the country
  • drier conditions than normal are expected across Victoria and Tasmania

Water Storages

  • Snowy Hydro's storages is slightly higher than the last 2-years, for the same month
  • HydroTas water storages remain comfortably above the State's Prudent Storage level

Everything else...

  • ancillary costs for April were the highest for the year, and exceeded the cost levels for the same time over the last 2-years
  • domestic natural gas prices rose during the month, mirroring the trend set by the Japan Korea Marker (JKM) prices
  • AEMO's Gas Statement of Opportunities show sufficient supply provided the Port Kembla gas import terminal is delivered before winter 2023
  • environmental costs are rising evident by VEET certificate costs continuing to escalate rapidly reaching $58/certificate by the end of the month, and forward LGC prices strengthening
Key Feature

Customer Churn, Origin's Half Yearly Results...

plus many more!

Our Key Feature this month looks at not just one, but five interesting topics for analysis:

  • Retail Customer Churn has spiked in April due to an abnormal level of transfer activity
  • Rooftop Solar installations continue to be soft for 2021
  • An Australian map of proposed Hydrogen facilities has been prepared given the hot topic
  • We have poured through the Interim Half Yearly report issued by Origin, and found some interesting snippets relating to out-of-the-money PPAs, LGC cost minimisation strategies, margins, etc
  • Environmental costs are surging, offsetting the fall in power prices
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