Aug-21 Energy Market Report

Carl Daley -

1.0  Overview

After a tumultuous May-July period for the Australian Electricity and Gas Markets, August was a COVID free walk in the park on a sunny day. In fact, August had many sunny days making for milder weather and softer demand for most regions. Operational electricity demand reached a new winter minimum demand on Sunday 15 August at 1pm with just 15,061MW.

Electricity spot prices fell by 50 percent on average across the NEM during August following record-high June and July prices in QLD and NSW. The average price across the NEM during August was just $45/MWh compared to $96/MWh in July and $120/MWh in June. The decrease in volatility resulted in less prices above $300/MWh  and all regions had record levels of negative price half-hours with the exception of QLD. Tasmania had the lowest average monthly price since December 2010.

Frequency Control Ancillary Service (FCAS) costs returned to typical levels, driven by QLD costs falling from $60m over the last 2-months, to only $4m in August.

August was also a quiet month on the new generation front with just one 16MW solar farm commissioned in SA, following a bumper July when an additional 1,000MW of new capacity came online.

Mild weather and plenty of Solar PV led to softer operational demand causing low levels of coal generation across the NEM during August. Average Brown Coal generation was the lowest level for the year, setting a new record low at lunchtime on Saturday 28 August with just 1,944MW for the half-hour ending 12:30pm.

With things settling down in the wholesale electricity spot market, we also noted forward prices softening. Cal-22 forward prices closed lower at the end of the month for all regions on the mainland, and future years continuing to indicate softer prices.

In the domestic gas market, prices fell substantially for all gas hubs despite prices in the Asian gas market continuing to rise. Average prices were between $8 to $9/GJ  in the Short Term Trading Market (STTM) and $7.63 in the Victorian Declared Wholesale Gas Market (DWGM) during August. The ACCC LNG forward price series continues to reflect rising prices in overseas markets.

In the national environmental certificate spot market, LGC and STC prices remain flat during August, while the state certificate spot market of VEEC and ESC prices continued to rally. LGC forward prices also strengthened during August.

This report is divided into 15 sections and the navigation menu will allow you to jump to areas of special interest, if you wish:

  1. Overview
  2. Key Features (ESOO, ISP Inputs for 2021, AER Q2-21 Market Report, Record Operational Demand, Solar PV Capacity)
  3. Market News
  4. Electricity Spot Prices
  5. Consumption & Demand
  6. Weather
  7. Generator Behaviour
  8. Generation
  9. Interconnectors
  10. Forward Prices
  11. Water Storages
  12. Ancillary Services
  13. Gas Market
  14. Environmental Certificates
  15. Weather Outlook

2.0  Key Features

This month's key features include:

  • an overview of the 2021 Electricity Statement of Opportunities
  • the new 2022 Integrated System Plan Scenarios announced by AEMO
  • a summary of the AER's Q2-21 Report key findings
  • record low winter operational demand
  • solar PV installations are slowing