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Image by Timothy Chan

February 2023

ELECTRICITY MARKET UPDATE & FUTURE PRICING

 

VICTORIA

Vic
  • Gas prices for Victorian residential and business customers on Variable Market Contracts will increase by an average of 27.3 per cent on 1 February 2023, following significant increases in the wholesale cost of gas

  • According to Energy Australia, “recent government actions are focused on the wholesale gas price for future contracts.  We supply customers from our existing wholesale gas contracts, some of which were contracted during 2022”

Electricity future pricing for VIC:

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NEW SOUTH WALES

NSW
  • Thermal coal companies in NSW will need to set aside between 7 and 10 per cent of their output for the domestic market to spread the financial impact of price caps imposed to push down the cost of electricity

  • The reservation measures are an expansion of a cap on the price of coal introduced by the Albanese government and legislated in the state in a bid to bring down power prices and shore up the national energy supply

  • Under current arrangements, some producers are supplying a large portion of their output for domestic supply while others are not required to supply any for domestic electricity generation

  • The NSW government has a commitment to reduce emissions by 70% below 2005 levels by 2035 as state looks to wean itself off coal-fired power

  • Liddell power station’s unit 3 (500 MW) is now offline and the remaining three units (1,500 MW in total) are scheduled to close in April 2023

  • Origin will close its 2.88 GW Eraring plant (Australia’s largest power station) seven years early in 2025

 

Electricity future pricing for NSW:

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  • Q4 2022 saw the lowest output from black and brown coal-fired generation since the start of the National Electricity Market (NEM) in 1998, driven by generator outages particularly in Queensland

  • Although CS Energy’s 750 MW coal-fired Kogan Creek generator returned to service on 21 December, Callide power station’s units C3 and C4 are not expected to come back online until May 2023

  • Queensland will end its reliance on coal-fired power generation by 2035 – up to a decade earlier than planned – as part of its new energy plan to have 80 per cent renewable energy by 2035.  There are currently eight coal-fired power stations in Queensland

  • The Palaszczuk government vowed household power prices will be $150 lower in 2032 and $1495 lower for small business

Electricity future pricing for QLD:

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QUEENSLAND

QLD
  • The loss of South Australia's grid after a transmission failure in November last year triggered a period of volatility

  • The incident separated South Australia from the rest of the NEM for a week, sending the price of power in the state soaring at times and forcing AEMO to order some gas-fired plants to run to help keep the system stable

  • South Australia was drawing more than 90 per cent of its electricity from renewable sources at one stage on November 19 despite operating as an "island"

Electricity future pricing for SA:

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SOUTH AUSTRALIA

SA
  • Western Australia is grappling with generation issues stemming from a prolonged shutdown of Synergy’s coal-fired Collie Power Station and more recently a weeks-long outage in gas supply from the Santos operations at Varanus Island.

  • The Australian Energy Market Operator (AEMO) is forecasting that demand for gas in Western Australia will outstrip supply over the next four years

  • The shortfalls are being driven by changes in production and increased demand, including for power generation and for new resources projects

  • AEMO estimates that demand for gas for power generation in WA’s main grid in the south-west will increase from 127 terajoules a day in 2023 to 304 TJ/day in 2032 as Synergy gradually closes down coal power stations.

  • Western Australia will see a significant portion of its coal-fired generation exit the market starting with the staged closure of all but 2 units at Synergy’s coal-fired Muja Power Station between late 2022 and 2024.  Collie Power station is also tipped to close within the next 3 years

  • Muja and Collie Power Stations together account for nearly 20 per cent of generation capacity in WA

  • Currently, renewable generation in WA makes up approximately one third of capacity in WA.  Renewable energy generation in WA is projected to rise to almost 80 per cent within 20 years

  • With a forecast gas supply shortfall and an increasing reliance on intermittent wind and solar generation taking hold in WA, it is likely the electricity market will experience significant levels of price volatility as reliable baseload generation becomes less available

WESTERN AUSTRALIA

WA
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