TTEG COMMENTARY
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This commentary was written prior to the Victorian storm, but the fundamentals still apply.
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As shown in the Market Report and charts below all markets have dipped slightly in futures prices, particularly in 2024. These drops have slowly been finding their way into current market offers, albeit (as yet) not to the same level. As per the articles, natural gas is also coming back a little.
Our assessment shows that the market remains very volatile with significant pricing risk. To mitigate these risks and to prepare for any opportunities, we strongly promote that you have a considered procurement strategy in place that appropriately reflects your appetite to pricing risk and recognises the impact of an adverse pricing scenario on your business profitability.
If you want some assistance, please contact us as we have some insights, learnings, and tools we can apply depending on your needs.
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Energy Efficiency Grants for Small and Medium Sized Enterprises Round 2
The Australian Government is offering a substantial fund of $41.241 million for the second round of Energy Efficiency Grants.
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Electric Vehicles (EV)
We have included an article on EV’s. TTEG’s MD, Craig Marschall, has a long history with transport fuels, including alternative fuels, and his view is due to the distances travelled by many in Australia it is meaningless comparing the uptake in Australia to almost anywhere in the world. He also said that there will be niche’s where the EV uptake is greater, for example in the cities.
He also promotes that until fuelling availabilities and times become more user friendly, that a hybrid can certainly be considered.
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AER Submission
TTEG is an AEMO accredited Embedded Network Manager and our submission was in response to the AER’s request for market learnings that they can potentially incorporate in to regulation to ensure an effective development of the market while at the same time enabling end user customers to be able to source the best deal from the market.
WHOLESALE MARKET UPDATE
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Homes and businesses without power due to Victorian storm
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On 13th of February, six transmission lines, were knocked down, leaving 473,000 customers still without power.
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Victoria recorded over 544,000 lightning strikes.
- At 1543 hrs 13/02/2024 At Hazelwood terminal station in the Victoria region an additional 4x500kv/220 transfors tripped.
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Australian Energy Regulator (AER) Wholesale Market Report
The AER have released their Q4-2023 Wholesale Markets Report covering electricity, roof top solar and natural gas markets.
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Australian Energy Market Operator (AEMO) Quarterly Dynamics Report
AEMO have released their Quarterly Dynamics Report for Q4-2023 covering electricity demand, generation, and pricing.
ELECTRICITY FUTURE PRICING CHARTS
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473,000 homes and businesses without power after Loy Yang A coal-fired plant goes offline in wild Victoria storm
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Hundreds of thousands of Victorians face prolonged power outages, potentially lasting "days if not weeks," following a major outage at Loy Yang A Power Station caused by severe weather. The collapse of six transmission towers due to heavy rain, winds up to 120km/h, and golf ball-sized hail led to extensive power line damage. Energy crews worked overnight to repair infrastructure, but as of Tuesday night, 285,500 homes and businesses remain without power, down from the initial 473,000. Various Melbourne regions are affected.
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The occurrence of all four operational units tripping at the Loy Yang A Brown Coal Fired Power Station marked a historic event in Victoria. It was the first time in the state's history that the system operated with only four coal units online, a reduction from the previous minimum of five. Loy Yang A was the initial generator to disconnect, strategically reducing the supply to restore system balance and prevent a system-wide outage. Generators are equipped with protection systems to prevent damage during such events, and Loy Yang A tripped to safeguard itself, effectively maintaining system stability in line with its designed function.
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However, AEMO warned of extended restoration timelines due to widespread storm damage, vegetation clearing and power line repairs. Load shedding and deliberate power shutdowns were implemented, and although the power station has reconnected, wholesale electricity prices in Victoria surged to $16,600 per megawatt. Neighbouring states are assisting through the interconnector, impacting electricity prices across the region.
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Australian Energy Regulator (AER) Wholesale Market Report
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The AER have released their Q4-2023 Wholesale Markets Report covering electricity, roof top solar and natural gas markets:
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National Electricity Market (NEM) spot prices averaged <$80/MWh in all regions in Q4, below 2022 levels but still not reflected in the pricing available to consumers.
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Due to seasonally lower demand, all fuel-types generated less than last quarter except large-scale solar.
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Record rooftop solar contributed to low electricity demand this quarter, including record minimum demand in Victoria and South Australia. Each region set a new solar output record this quarter, and although relatively little new generation entered the market, a significant increase in new entry is currently scheduled for 2024.
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East coast gas spot market prices averaged $10.83 per GJ, slightly above the previous quarter (3.8%).
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Low domestic gas market demand and gas generation offset high LNG export flows.
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Average annual wholesale electricity prices in the National Electricity Market (NEM) fell by between 44% and 64% and average annual east coast gas market spot prices fell by 43% in 2023, attributable to milder weather conditions, lower fuel costs, fewer coal supply issues and an increase in cheap wind and solar supply.
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International liquid natural gas spot prices decreased in November and December. When international prices are high, it can increase pressure on domestic prices. While it is typical to see a continued increase in prices as the Northern Hemisphere enters winter, prices this quarter likely reflect Europe’s high gas storage levels and mild winter conditions.
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Domestically, the Iona storage facility remained at record high levels, topping up inventory in late November and late December. This supports market resilience against sudden changes in supply or demand.
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Energy Australia Suffers $1.1 billion Write-Down
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The write-down in Energy Australia’s retail business comes as the country’s retailers have been seeking to head off a potential cut in retail margins allowed for by the Australian Energy Regulator in its calculations of the benchmark tariff for household and small business customers that will apply from July 1. The regulator found retail margins as a percentage of residential bills were 2.3 per cent on average across the National Electricity Market in the 2022-23 financial year, down from 8.9 per cent in 2016-17.
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