Electricity spot prices continued to fall well short of market expectations in October, driving down the Q4-23 forward price. The sentiment of the market outlook is mixed with some Regions strengthening and others softening.
This part of our monthly report focuses on the financial markets. The highlights for the month are:
- Cal-24 forward prices generally softened.
- The forward price trends in NSW and Qld for the next three years reveal contrary market sentiment; NSW forward prices strengthen from Cal-24 to Cal-26, while Qld forward prices soften for the same period.
- Spot price outcomes have consistently fallen short of market expectations compared with forward prices prior to the quarter starting and the ASX trade-weighted average prices trading well above consequential spot prices.
- Volatility of Variation Margins increased in October compared to recent months, reaching levels similar to those observed in Oct-21, although significantly lower than the levels experienced in Oct-22.
- The LGC prices tended to soften, while Cal-27 jumped from $27.53/MWh in September to $32.10/MWh in October.
