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February Energy Update

Solar panel power plant

February 2023

The market fell throughout February, and prices ended the month at their lowest point since May 2022. Although there appear to be very few positive or negative drivers in the market, the falls have been attributed to the lack of volatility with plenty of supply and mild demand. With these conditions we are seeing spot prices regularly going negative in all NEM states during the middle of the day. Average daily spot prices did not go far above $100/MWh for most of the month across the NEM with the only exception being South Australia. Monthly average spot prices fell from January for NSW and QLD but increased for SA and VIC. Gas spot prices also fell at the end of February to end the month just above $10/GJ.

Although there is some potential for prices to fall further, with a lack of clear downward drivers and the closure of Liddell power station in April fast approaching, there is likely to be some nervousness in the market and any adverse events could quickly send prices higher again. Prices are now highest for later years in NSW and SA due to reliability concerns after 2025 (in particular the proposed closure of Eraring power station in NSW), however VIC and QLD are still seeing decreasing prices over future years.

Recent Highlights

  • AEMO released an update to their Electricity Statement of Opportunities which evaluates the reliability of the energy grid for the next 10 years. While system reliability is within the reliability standard for the next 2 years, urgent investment is required to replace retiring coal generation. AEMO, AFR
    • Kurri Kurri Gas Plant and Snowy 2.0 Pumped Hydro have each been delayed one year to Dec 2024 and Dec 2027 respectively, however the Waratah Super Battery has been increased to committed status and is due to come online late 2025.
    • There is growing speculation that Eraring Power Station may delay its expected 2025 closure if there is not enough replacement capacity. AFR
  • AGL is under scrutiny by the ACCC for their 24% jump in gas earnings. It comes as other fossil fuel producers including Woodside and Stanmore Coal report surging profits as a result of the global fuel shortage. AFR
  • RERT was dispatched in Queensland for 2.5 hours on Friday 3rd February evening due to soaring demand from hot weather. WattClarity
    • A new all time maximum demand was forecast, however actual demand fell well short of the forecast.

Renewable Energy News

  • The 850MW/1680MWh Waratah Super Battery has received final approvals, and will be Australia’s largest big battery at over double the size of existing battery systems. RenewEconomy
  • Newcastle energy storage startup MGA Thermal has received funding from Shell to accelerate the development of a demonstration plant for their thermal storage bricks, which can be used to operate retrofitted coal generators off renewable energy. MGA Thermal
  • Solar thermal tech company Vast Solar has secured a $65 million grant for a 30 MW Concentrated solar thermal plant in south Australia. This will have the ability to supply energy for 12 hours including overnight. AFR

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