The Futures market has remained very flat this month, after a slight rebound following the Christmas period as demand increased due to business returning, the impact of the government intervention became clearer and temporary issues at a couple of Queensland generators. NSW Fin 2024 Futures are sitting around $125/MWh, QLD at $106, VIC at $85 and SA at $116. January began with lower spot prices across the NEM, however the end of the month saw the re-emergence of average daily spot prices above $100/MWh with a period of warmer weather and a higher average demand.
The government intervention at the end of last year had an immediate effect to lower Futures prices, however they still remain high compared to historical prices. When considering the length of contracting it is important to consider the possible market effects of upcoming events including the full closure of Liddell power station in April 2023, end of the government’s prices caps at the end of 2023 and the closure of Eraring power station in 2025. There are two new gas generators which are due to come online at the end of this year (318 MW Tallawarra B and 660 MW Kurri Kurri Gas Plant), therefore turmoil in the gas market is likely to be closely related to electricity price outcomes. Gas producers are still in the process of understanding the new legislation (in particular the “reasonable price” provision in a mandatory code of conduct to apply after the price cap is lifted) and ceased offering new gas supplies earlier in January, leaving some customers on expensive retailer default rates.
- The Chubb report into Australian carbon credits has deemed the scheme to be essentially sound, and concluded that although the scheme can be improved and tightened it is fundamentally well designed. ABC
- The report made a number of recommendations to improve the transparency and integrity of the scheme.
- This clears the way for the Government’s overhaul of the safeguard mechanism to set an emissions baseline for big emitters, with the use of ACCUs for carbon offsetting.
- Labour has announced the details of their overhauled safeguard mechanism, which will take effect from July 1st if the legislation passes. AFR
- An Origin Energy Takeover bid by Brookfield and EIG has been called into doubt after the exclusivity period passed with no deal in sight. It has been complicated by the government intervention to cap gas prices, in particular the “reasonable pricing” provision which risks long term investment in gas. AFR
- A look at Liddell generation statistics in the lead up to its April 2023 full closure: Farwell Liddell – WattClarity
Renewable Energy News
- An offshore wind zone has been declared for the Hunter Region, the second offshore wind zone after Gippsland on the Victorian South Coast. AFR
- Huge northern territory renewable energy project Sun Cable has collapsed and gone into voluntary administration after a disagreement in the company’s direction by billionaire owners Andrew Forrest and Mike Cannon-Brookes. RenewEconomy