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January 2024 Energy Market Insights

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January 2024

January presented a series of notable events impacting electricity supply and demand. South Australia experienced an unexpected dip in demand towards the start of the month, with rooftop solar PV generation contributing to the deviation from predicted levels. Meanwhile, Victoria faced challenges as Loy Yang A unit 4 had multiple outages, disrupting approximately 6% of the state’s monthly energy supply. This event raised concerns about potential market price effects, underlining the vulnerability of energy production systems to unexpected outages. 

Further complicating the energy landscape, Queensland encountered multiple challenges, with record-breaking demand on January 19th and then again on the 22nd, reaching 10,161MW and 11,036MW, respectively. This high level of market demand and extreme volatility, unfortunately continued through to the month’s end. Interconnector constraints from QNI and Directlink, extremely high temperatures (40°+), and low renewable energy generation contributed to the market volatility and prices reaching as high as $14,928/MWh. Additionally, the state saw approximately 66,000 power outages which were caused by the category-two cyclone Kirrily, further impacting the state.  

 Due to the impact of events mentioned above, the spot price for QLD averaged relatively high at $161/MWh, whereas NSW ended the month comfortably lower at $81/MWh, even lower still are SA at $33/MWh, and VIC at $22/MWh. Additionally, the gas STTM prices are currently sitting around $12/GJ. The NSW Fin 2025 Futures are fluctuating around $103/MWh, QLD at $91/MWh, with SA and VIC at $90/MWh and $64/MWh, respectively. 

 Despite consistent concerns about the possibility of intense summer heat caused by the onset of El Nino, the unpredictable weather patterns experienced in January have led to sporadic volatility rather than a consistent trend, especially in Queensland. Consequently, there have been varied price movements across different states, with some witnessing increases while others saw declines by the end of the month. A key factor to note is the directional flow of generated electricity through interconnectors that connect the states. Specific regulations dictate that the flow of electricity may not always align with a logical price progression, creating an unusual market price defiance in a highly uncertain environment. However, we will explore this in greater clarity at a later date. 

Recent Highlights

  • At the end of 2023, AEMO released their October version of the Energy Security Target Monitor Report, targeted at the NSW Minister for Energy. The report aims to assess whether NSW will meet the energy security target for the next financial years, for up to 10 years’ time. The report is in favour of no material reliability gap. RenewEconomy 
    • Coal unit Loy Yang A4 saw instability through multiple outages: 
  • Callide C3 and Callide C4 have their return dates extended. These stations are undergoing a court case regarding the cause of their enormous failures. AFR 

Renewable Energy News

  • Towards the end of 2023, CSIRO released their GenCost consultation draft for 2023-2024. It suggests that variable renewable energy (VRE) such as solar and wind power remain, and will be, the most cost-effective option when dealing with energy grid decarbonisation. The thing to note here is the draft factors in storage costs and transmission costs when concluding this evaluation. AFR 
  • An assessment on the early wind farms that were implemented around 2003-2005, in terms of technical and commercial performance, suggests that, though the output is on slowly declining trend, there may be extra life left in them. WattClarity 

Market Reports

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