December 2023 ENERGY FOCUS
​
​
ELECTRICITY FUTURE PRICING CHARTS
​
​
​
NEWS ITEMS
​
​
Bowen abandons RET, opts for 32GW auctions in a significant policy shift to bolster renewable energy
​
AEMO warns coal-fired power plants could drop off before replacements are ready
​
WHOLESALE MARKET UPDATE
​
​
Electricity Spot Prices
Warm weather on the horizon puts upward pressure on forward contracts as we move into December. While November continued to fall across the forward contracts, early December has shown some potential insights of what summer 2023/24 might entail. The Australian mainland is starting to see more hot weather forecasted at higher temperatures but also for longer periods.
On the 8th of December, National Electricity Market (NEM) wide demand surpassed 30GW, marking the first occurrence since July. The early indications of heat in late November and early December have played a role in sustaining spot prices during this period.
​
Coal
Coal stockpiles in the NEM and the Western Electricity Market (WEM) are gradually returning to normal levels, indicating a positive trend into the overall supply situation. However, the operational landscape faces challenges with several major generating units undergoing longer-term outages, primarily spanning the November to December period. These outages include:
-
QLD: Callide B1/B2, C3/C4, Gladstone ½, Tarong 4
-
NSW: Bayswater 1, Eraring 2
-
VIC: Loy Yang A2, Newport, Yallourn 2
-
WA: Blueswater U2
​
Generation
-
Sustained high levels of reliability and consistency observed in baseload operations, contributing to overall system stability.
-
The anticipated Return to Service for Callide C has experienced delays, impacting the timeline for its operational resumption.
-
Yallourn, a key facility, is currently operating at a reduced capacity, temporarily functioning at 50% of its usual output. This situation is described as 'momentary,' suggesting a short-term deviation from normal operating conditions.
- Renewable generation abundance kept prices low during the day, and the efficient transfer of power across interconnectors enabled states with substantial hydro storage to maintain robust levels, preparing for the upcoming summer.
​
Renewables
-
The Clean Energy Finance Council highlights CAL23 as the most challenging year for large-scale renewable energy investment since data tracking began in 2017.
-
Nationally, there is a significant uptick in Renewables & Storage Grid Applications
-
State government-owned energy company Synergy has received planning approval for its 500MW/2,000MWh Collie Battery Energy Storage System (CBESS) project in WA.
-
Ongoing good weather has continued to keep renewable generation availability strong
​
ELECTRICITY FUTURE PRICING CHARTS
​
​
GAS MARKET UPDATE
​
On the east coast, total conventional gas production fell 27% to a record low of 91 PJ in Q3 2023, while consumption contracted by 18% (down 29 PJ) compared to a year earlier, which is more than the Cooper Basin and Otway Basin’s combined production for Q323.
-
The Federal Government revealed that, under the Gas Code of Conduct Agreement, an extra 300 petajoules (PJs) of gas would be allocated for domestic use. Of this, 140 PJs are scheduled for availability up to 2027, with the remainder to be released post-2027.
-
Gas spot prices continued the upward trend through November, pushing close to $13/GJ before retracing.
-
Australian gas production (LNG and domestic supply) declined from its record highs in the first half of 2023, primarily due to decreasing domestic gas production on the east coast.
-
WA conventional domestic gas production decreased to 100.3 PJ in Q3 2023, down 6.9% qoq, due to rapid decline in output from the Santos operated Devil Creek plant.
-
West Coast gas contracts have also continued to rise as availability issues and additional generation requirements kick in.
​
Attention is required to monitor East Coast gas usage as supply from Queensland may become necessary due to scheduled gas production maintenance outages affecting various regions, including:
-
NSW: Colongra 3
-
VIC: Newport, Jeeralang B1
-
SA: Torrens Island B2/B3/B4 staggered
-
WA: Alinta Wagerup U2, Newgen Neerabup GT
​
​
AEMO Summer Readiness Report
​
Annually, AEMO engages in preparations for the upcoming summer, fostering collaboration with generation and transmission network providers, federal and state governments, and key agencies to actively address heightened risks to power system operations. These preparations aim to mitigate risks and provide reliable and secure power to consumers throughout the summer months, building upon strategies and actions that ensured a dependable and secure supply during the summer of 2022-23.
​
AEMO's objectives for delivery of secure and reliable energy are to:
-
Maximise the available generation fleet, transmission assets and demand-side participation.
-
Monitor fuel supply chain.
-
Maximise transmission system resilience, recovery and contingency management.
-
Continuing operational improvements.
-
Ensure additional off-market reserve capacity, where it is identified as being necessary, is available via the Reliability and Emergency Reserve Trader (RERT) mechanism.
-
Work collectively and in close collaboration across industry to ensure transparency and open communication, focused on the common goal of a prepared power system.
​
The annual AEMO Summer Readiness Industry Briefing was held on 13 November 2023 and covered the following topics:
-
Weather & Climate outlook
-
Electricity & Gas System Readiness
-
Network Readiness
-
Victorian Bushfire Readiness
​
Bowen abandons RET, opts for 32GW auctions in a significant policy shift to bolster renewable energy
​
In a significant shift in energy policy, the federal Labor government has decided to abandon the long-standing renewable energy target (RET) and adopt a hands-on approach to achieve its ambitious goal of 82% renewable energy by 2030. Federal Energy Minister Chris Bowen announced that a series of auctions would be conducted to secure 32 GW of new wind, solar, and storage capacity. This departure from the RET is motivated by the belief that auctions, similar to successful models in the ACT and NSW, provide a more effective mechanism for initiating new projects.
The government aims to address the slowdown in renewable investment, accelerate the transition away from aging coal-fired power stations, and bolster the reliability of the energy grid. The auctions, starting in April next year and continuing every six months until 2027, will seek 9 GW of new dispatchable capacity and 23 GW of new wind and solar generation.
Bowen's Capacity Investment Scheme, with revenue floors and a ceiling, aims to avoid passing costs directly to consumers and provide long-term certainty for investors. The move has received positive reactions from industry stakeholders, with expectations of increased investment, job creation, and lower power bills for Australians. The detailed design of the contracting mechanism and ongoing support for households and businesses adopting renewable energy solutions will be crucial in realizing the transition to a clean energy future.
Bowen abandons RET, opts for 32GW auctions in a significant policy shift to bolster renewable energy
​
In a significant shift in energy policy, the federal Labor government has decided to abandon the long-standing renewable energy target (RET) and adopt a hands-on approach to achieve its ambitious goal of 82% renewable energy by 2030. Federal Energy Minister Chris Bowen announced that a series of auctions would be conducted to secure 32 GW of new wind, solar, and storage capacity. This departure from the RET is motivated by the belief that auctions, similar to successful models in the ACT and NSW, provide a more effective mechanism for initiating new projects.
The government aims to address the slowdown in renewable investment, accelerate the transition away from aging coal-fired power stations, and bolster the reliability of the energy grid. The auctions, starting in April next year and continuing every six months until 2027, will seek 9 GW of new dispatchable capacity and 23 GW of new wind and solar generation.
Bowen's Capacity Investment Scheme, with revenue floors and a ceiling, aims to avoid passing costs directly to consumers and provide long-term certainty for investors. The move has received positive reactions from industry stakeholders, with expectations of increased investment, job creation, and lower power bills for Australians. The detailed design of the contracting mechanism and ongoing support for households and businesses adopting renewable energy solutions will be crucial in realizing the transition to a clean energy future.
Bowen abandons RET, opts for 32GW auctions in a significant policy shift to bolster renewable energy
​
In a significant shift in energy policy, the federal Labor government has decided to abandon the long-standing renewable energy target (RET) and adopt a hands-on approach to achieve its ambitious goal of 82% renewable energy by 2030. Federal Energy Minister Chris Bowen announced that a series of auctions would be conducted to secure 32 GW of new wind, solar, and storage capacity. This departure from the RET is motivated by the belief that auctions, similar to successful models in the ACT and NSW, provide a more effective mechanism for initiating new projects.
The government aims to address the slowdown in renewable investment, accelerate the transition away from aging coal-fired power stations, and bolster the reliability of the energy grid. The auctions, starting in April next year and continuing every six months until 2027, will seek 9 GW of new dispatchable capacity and 23 GW of new wind and solar generation.
Bowen's Capacity Investment Scheme, with revenue floors and a ceiling, aims to avoid passing costs directly to consumers and provide long-term certainty for investors. The move has received positive reactions from industry stakeholders, with expectations of increased investment, job creation, and lower power bills for Australians. The detailed design of the contracting mechanism and ongoing support for households and businesses adopting renewable energy solutions will be crucial in realizing the transition to a clean energy future.
Bowen abandons RET, opts for 32GW auctions in a significant policy shift to bolster renewable energy
​
In a significant shift in energy policy, the federal Labor government has decided to abandon the long-standing renewable energy target (RET) and adopt a hands-on approach to achieve its ambitious goal of 82% renewable energy by 2030. Federal Energy Minister Chris Bowen announced that a series of auctions would be conducted to secure 32 GW of new wind, solar, and storage capacity. This departure from the RET is motivated by the belief that auctions, similar to successful models in the ACT and NSW, provide a more effective mechanism for initiating new projects.
The government aims to address the slowdown in renewable investment, accelerate the transition away from aging coal-fired power stations, and bolster the reliability of the energy grid. The auctions, starting in April next year and continuing every six months until 2027, will seek 9 GW of new dispatchable capacity and 23 GW of new wind and solar generation.
Bowen's Capacity Investment Scheme, with revenue floors and a ceiling, aims to avoid passing costs directly to consumers and provide long-term certainty for investors. The move has received positive reactions from industry stakeholders, with expectations of increased investment, job creation, and lower power bills for Australians. The detailed design of the contracting mechanism and ongoing support for households and businesses adopting renewable energy solutions will be crucial in realizing the transition to a clean energy future.
Bowen abandons RET, opts for 32GW auctions in a significant policy shift to bolster renewable energy
​
In a significant shift in energy policy, the federal Labor government has decided to abandon the long-standing renewable energy target (RET) and adopt a hands-on approach to achieve its ambitious goal of 82% renewable energy by 2030. Federal Energy Minister Chris Bowen announced that a series of auctions would be conducted to secure 32 GW of new wind, solar, and storage capacity. This departure from the RET is motivated by the belief that auctions, similar to successful models in the ACT and NSW, provide a more effective mechanism for initiating new projects.
The government aims to address the slowdown in renewable investment, accelerate the transition away from aging coal-fired power stations, and bolster the reliability of the energy grid. The auctions, starting in April next year and continuing every six months until 2027, will seek 9 GW of new dispatchable capacity and 23 GW of new wind and solar generation.
Bowen's Capacity Investment Scheme, with revenue floors and a ceiling, aims to avoid passing costs directly to consumers and provide long-term certainty for investors. The move has received positive reactions from industry stakeholders, with expectations of increased investment, job creation, and lower power bills for Australians. The detailed design of the contracting mechanism and ongoing support for households and businesses adopting renewable energy solutions will be crucial in realizing the transition to a clean energy future.
AEMO warns coal-fired power plants could drop off before replacements are ready
​
Australia's main power grid is at risk of coal-fired power plant retirements outpacing the development of sufficient generation capacity and transmission lines, AEMO warns in its draft report on the integrated system plan for the national electricity market.
The closure of 10 major coal-fired power plants since 2012 has accelerated, with the remaining plants potentially shutting down three times faster than anticipated. The ambitious transition to renewable energy involves tripling solar and wind farms by 2030 and expanding sevenfold by 2050.
AEMO emphasises the need for significant storage, hydro, and gas-powered generation growth and underscores the challenges faced, including project delays, investment uncertainties, and workforce shortages.
The report also calls for an additional 10,000km of transmission by 2050. Despite concerns and challenges, AEMO's chief executive, Daniel Westerman, highlights the importance of delivering transmission projects to avoid additional costs of $17 billion to consumers.
Meanwhile, the NSW government introduces a national orderly exit management framework to address coal-fired plant retirements and ensure energy reliability during the transition to renewables.
