News and Articles

February & March 2024 Energy Market Insights

Top down drone view of a small neighborhood of mid-century Australian homes and yards on a quiet street in the outer suburbs of Melbourne

There has been a busy start to the year with volatility and significant events causing uncertainty over the immediate direction of energy markets. The planned retirement of Australia’s largest coal-fired power station will be delayed as Origin Energy holds talks with the NSW Government to keep Eraring open beyond August 2025. However, indecision in the market will continue until final decisions are made. 

February – March 2024

In early February, the NEM experienced high market demand, often exceeding 30,000 MW, leading to significant spot price fluctuations. However, the substantial solar PV generation partially mitigated these spikes. A severe thunderstorm in VIC caused widespread damage, including fires and peak outages affecting half a million people. With wind speeds reaching 120 km/h, equivalent to a category 2 cyclone, the storm knocked down six transmission towers and tripped all four units of the Loy Yang Power Station, highlighting the vulnerability of infrastructure in extreme events and contributing to market unpredictability. 

Southern NEM states faced additional challenges later in the month as bushfires impacted TAS, VIC, and SA, reducing transmission capabilities and hindering solar PV generation due to smoke, dust, and debris in the air. This decreased electricity supply coincided with higher market demand and therefore resulted in increased spot market prices. SA experienced the driest conditions within three decades which exacerbated spot price volatility reaching the price cap of $16,600 MWh. This volatility flowed through to VIC, and TAS. 

Meanwhile, NSW and QLD experienced extreme heat and high humidity, driving up market demand and spot prices. NSW reached its highest demand of the summer at 13,764 MW, with market cap price being reached and QLD slightly lower at just over 11,000 MW. Consequently, the average spot prices for February increased across all NEM states compared to the previous month, with gas STTM prices just over $11/GJ. 

March’s energy market was less eventful, with VIC and SA experiencing elevated demand and prices due to hot temperatures, reaching over 8,600 MW and 2,500 MW, respectively. Prices peaked in VIC and SA, influenced by increased demand, low wind generation, and reduced solar output in the afternoons. Towards the end of the month, SA faced challenges with fires at the Torrens Island Power Station, impacting local energy supply. 

Average spot prices for March continued to decline, reflecting the transition from summer and a lack of significant driving catalysts. NSW and QLD saw the most significant decreases, while VIC and TAS experienced slight drops and SA remained on a steady trajectory. Gas STTM prices remained around $11/GJ, with expectations of an increase as temperatures drop in winter. 

Recent Highlights

    • AEMO released Preliminary Operating Incident Report regarding the “significant power systems event” that occurred on Feb 13. This covered the 3 separate events that occurred on that day. AEMO
      • Six 500kV transmission towers go down, including;
        • All four at Loy Yang A 
        • Dundonnell Wind Farm
        • Yaloak South Wind Farm 
      • Hazelwood’s network trip 
      • Stockyard Hill Wind Farm loss 
    • Report released by CS Energy into unit failure of Callide C4, originally occurring back in 2021. It explains that the incident was caused by a newly installed battery charger for the DC system, which was undergoing commissioning and connection. However, during the connection process, a voltage collapse occurred, and despite its intended function to sustain unit voltage, the new battery charger failed to fulfill its requirement. CS Energy 
    • AGL published FY 23/24, half year results, indicating $399 Million profit across the last six months. WattClarity 
    • Engie’s closure announcement of two SA diesel power stations – 63MW Snuggery generator and 75MW Port Lincoln plants – from 1st July, ahead of scheduled closure in 2028. Due to increasing losses. AFR 
    • Australian Energy Regulator releases Enhanced Wholesale Market Monitoring and Reporting Guideline. This document represents the initial actions for creating guidelines regarding their wholesale market monitoring, including the reporting and collection of those statistics. AER 
    • AEMO Published their GSOO 2024 which highlights gas opportunities for the market, focussing on Australia’s east coast. AEMO 
    • Discussions are underway concerning Eraring Power Station’s delay to closure. The plant supplies a significant portion of electricity, so much that there is nothing set to replace its production capabilities and when it shuts down, it’s set to leave a “black hole” in terms of generation. WattClarity, AFR, RenewEconomy 

Renewable Energy News

  • Former prime minister Malcolm Turnbull’s private company, Upper Hunter Hydro, has a contract awarded to the development of two large-scale pumped hydro projects in the Hunter Valley. AFR 
  • The government is expanding the Capacity Investment Scheme (CIS) by launching a tender process to boost its renewable energy target for 2030, starting with 6 gigawatts of renewables in May. Its current aim is to add 32 gigawatts of capacity by 2030, with an estimated cost of $67 billion. AFR 

Market Reports

Elevate Your Energy Strategy

Subscribe now for valuable insights, industry updates and advice.