Nov-21 Energy Market Report

1.0 Overview

The 2021 rollercoaster continues as the year draws to a close. Following the price shock caused by the Callide C explosion in late May, prices rallied for many months and then wholesale electricity spot market recorded low prices in October, while the forward markets generally stabilised. However, the markets rallied again during November, with rising electricity spot prices, forward prices, gas market prices, FCAS costs and LGC prices.

After record-low spot prices in October, prices rallied for all regions during November. Queensland's spot price rallied by more than $30/MWh to $96/MWh, while Vic, Tas and SA prices all jumped by around $20/MWh during the month.

Wholesale gas spot prices finally succumbed to upward pressure from international markets with all regions rallying by about 50% to around $12/GJ.

In the environmental certificate market, the LGC spot price closed the month at $42/certificate, the highest level in over a year.

Frequency Control Ancillary Service (FCAS) costs also surged during November, with QLD contributing almost $66m of the $75m across the NEM.

Looking at generation for the month, coal-fired generation remained at historically low levels and gas-fired generation was a record low for the second month in a row. In the renewables space, battery storage generation smashed previous records, utility-scale solar was tempered by plenty of cloud cover, although rooftop solar generation still managed to increase to near-record levels. Wind generation was similar to last month. Hydro generation ramped up during November as record rainfall pushed water storage levels above 50% for Hydro Tasmania and 40% for Snowy Hydro, with more predicted rain on the way.

On behalf of our team, we wish you and your family all the best for the Festive Season, as we look forward to another year full of events in 2022.

2.0 Key Feature

2.1 Draft ISP 2022 released with new preferred scenario

As a quick update, before we went to print for our November Market Report, AEMO released the Draft Integrated System Plan for 2022. As has been the case for each ISP, AEMO has dramatically changed the outlook and in this case, the business-as-usual "Central" scenario has been dropped completely and replaced with the "Step Change" scenario as the most likely.