Overview
The run of spot electricity prices since mid-May has been the largest shock to the industry in QLD and NSW since the coincident drought of 2007. In summary:
- QLD delivered the highest June average spot prices on record, while NSW was the highest June average since 2007
- gas spot prices have rallied substaintially
- the rally of forward electricity prices has accelerated in all Regions
- high baseload outages tightened supply
- Administrative Prices were declared for QLD Ancillary Services
- Victoria declared a State of Emergency following the potentially flooding of Yallourn power station's coal mine
Tight supply led AEMO to issue a record number of Lack-of-Reserve notices as half-hour spot prices regularly pushed, or threatened to push above $2,500/MWh. Queensland's average spot price was the second highest month on record at just over $200/MWh and the highest June on record, while in NSW averaged $160/MWh.
Uncharacteristically cold weather in the northern States contributed to high energy consumption and maximum demand levels in QLD and NSW, adding further price pressure. Queensland solar farms benefited from the increased price volatility; however solar generation weighted prices year-to-date are significantly lower than past years.
Frequency Control Ancillary Service costs were at near record levels with QLD contributing $63.3m to the total $87.6m in FCAS costs for June. The cumulative price for the Raise 6 Second FCAS breached the Cumulative Price Threshold triggering an Administrative Price Period for the ancillary service market in QLD.
Electricity forward market prices accelerated upward for FY-21/22 surging across all regions and added more than $11/MWh for Queensland.
Gas spot and forward markets also took off during June with spot prices heading beyond $10/GJ and the ACCC's netback forward LNG market for the new financial year jumping $4/GJ, shooting past $15/GJ.
