Jan-21 Energy Market Wrap

Jan-21 Energy Market Wrap

The year 2021 has begun with a stack of historical records, or events that have not occurred for many years. One can never complain about the National Electricity Market being boring.

Electricity Spot Prices

The NEM enjoyed a mild and relatively uneventful January which saw wholesale electricity spot prices fall to the lowest averages seen in many years for all regions. The average temperature across the capital cities were also lower than last year’s, keeping demand in check. The daily average price and maximum Capital City temperature is shown below in our interactive chart.


The incidence of negative priced half hours in VIC and SA has risen particularly in recent months. For the second consecutive month SA exceeded 20% and VIC exceeded 15%. Have a look at our interactive chart ...


Electricity Forward Market

Forward electricity prices also softened, particularly SA which has now led to SA having the lowest forward price in the NEM. A remarkable turnaround although not without it's challenges, from historically being the most expensive in the NEM.


Market News

On the news front, there were significant announcements for the electricity market during the month including:

  • Big batteries are coming big time, this time in NSW and SA
  • The Energy Security Board has criticised the lack of action to resolve the challenges facing the market
  • The High Court approves the massive Golden Plains wind farm in Victoria
  • Global gas prices are rising
  • The NT Government approves the world’s largest solar and battery farm
  • “Green steel” is pushing ahead
  • The Federal Minister for Energy continues to threaten to build a large NSW gas plant
  • “Cheap gas” a dream, says Origin Energy
  • Shell sell-downs from Gladstone LNG plant
  • The lawsuit against Queensland generators gains traction

FCAS

In January 2020, Frequency and Control Ancillary Costs (FCAS) escalated to $76m from $14m the year before.  January 2021 was a relatively modest $9.2m, the lowest January since 2018.


Lack of Reserve

So quiet was January,  it was the first time since Jan-12 that no Lack of Reserve forecast notices were issued. Have a look at the wheel below to see how 2021 ended the run since 2013.




This month’s edition does a deep dive on the historical records and events that occurred during the month and uncovers some insightful highlights, including:

  • Operational demand was the lowest in at least a decade
  • Despite significant solar farm capacity coming online in the last few months, solar generation was like last month
  • Summer coal-fired generation outages were noticeably higher than past years
  • Coal-fired generation and in some cases gas powered generation, produced the least amount of energy for years
  • Wind and solar farms had the lowest spot price revenue for years
  • Solar PV spot price revenue has also been smashed, and must be putting pressure on feed-in rates to drop further
  • Tasmanian generation was the lowest for 2-years
  • Large Generation Certificate costs for later years increased during the month
  • Gas spot prices are holding at elevated levels compared to mid-year levels

For more market news, our “At a Glance” state-by-state summary, our 2021 predictions and more in-depth market analysis subscribe now to access our Monthly Market Reports.




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