February was a relatively quiet and uneventful month in the energy market despite prices being tested by seasonably high demand in Vic and SA. Wholesale electricity and gas spot prices remained subdued, while the electricity forward market and the LGC market continued to soften.
The wholesale electricity spot market was well-behaved during February, with the exception of some price volatility in SA when high demand coincided with low wind and solar generation. Both SA and Vic recorded very high maximum scheduled demand on the hottest day of the month, but these were just isolated events during an above-average February.
Forward electricity market prices softened during the month, as did the Large-scale Generation Certificate (LGC) market, where Cal-23 prices fell below $45/certificate for the first time in more than 12 months.
Looking forward, the move from a long and intense La Niña event to El Niño WATCH status, combined with a weather outlook for below-average rainfalls, has increased the risk of extreme weather and a potentially disastrous bushfires season next summer.
On the more immediate horizon looms the closure of Liddel Power Station in late April and the closure of Eraring Power Station in Aug-25. Interim Reliability Gaps forecast for SA in 2023/24 and Vic in 2024/25 with a Reliability Gap forecast for NSW in 2025/26. The market remains with challenges.
1.0 Overview
The highlights for the month are:
- Average wholesale electricity spot prices remained below $100/MWh for all regions for February. The average price year-to-date for SA increased significantly to $76/MWh due to increased price volatility. Prices in Vic were also slightly higher than the previous month, while prices in the other NEM regions were consistent with January prices
- Total energy consumption on the mainland was around 2% higher than at the same time last year, and 4% lower in Tas. Maximum demand was the highest in six years for SA (3,117MW) and the highest in four years for Vic (8,582MW), occurring on the hottest weekday of the month for both regions
- The weather outlook shows above-average temperatures for Tasmania, WA, central Australia, as well as Northern NSW and the southern two-thirds of Qld. The rainfall outlook is showing below-average rainfall for most of Australia including Tasmania which may be a growing concern for Hydro Tas
- Generator offers during February revealed more capacity offered by black coal and gas-powered generators, with black coal offering more capacity in the must-run price bands below -$500/MWh and gas offering more capacity in the extreme price bands above $5000/MWh. Hydro power stations offered less capacity, with a reduction in offers above $5000/MWh
- Our new generation report revealed the connection of two new large-scale batteries with the 150MW Hazelwood BESS in Vic, and the 41MW Tailem Bend 2 Hybrid Renewable Power Station in SA
- Generation market share shows coal and gas generation market share continuing to shrink as more market share is taken up by both utility-scale Solar and Rooftop Solar PV generation
- Baseload outages were lower for all regions compared to the same time last year, particularly in NSW where the average outage was 700MW lower than the previous year and the maximum outage was 1700MW lower than in 2022
- Wind generation curtailment was considerably higher in Vic and SA compared to the same time last year. Curtailment of solar generation in Vic and Qld was the highest level for February in the last four years
- Snowy Hydro water storages were at the highest level for February in the past ten years, while Hydro Tas storage levels remain consistent with the past six years at around 40%
- Wholesale electricity forward prices continued to soften during February with the FY-23/24 price closing lower than the previous for all regions.
- Average wholesale gas spot prices for February were between $13/GJ to $15/GJ
- LGC spot prices continued to soften during February, falling by $7.50 to a close of $42.75/GJ
