October has seen some significant upward and downward movements in the market, however CAL 2023 prices have retreated to end lower than the beginning of the month across most states. In NSW, prices are comparable to the beginning of September. There were rapid rises in the Futures market at the beginning of October following comments from Alinta’s CEO about the state of the market and expected increases in electricity prices next year, and a peak was reached on 10 October (the highest seen so far). There was a downturn in the market late in October after the Federal budget and talk of government intervention in the market, however nothing has been announced and the details and timeframes of any possible intervention are unknown. This downturn was also assisted by the return to service of Loy Yang A power station after a 6-month outage. The market rebounded in the first few days of November after unfortunate and untimely news of an outage of one of the units at Callide power station in Queensland with a full outage happening for 3 hours on 4 November. The remaining unit is expected to be offline until January. In recent days the gas price has fallen to below $15/GJ and as low as $10/GJ, which is again helping to lower energy prices.
The market is highly sensitive and is overreacting to any news and speculation about energy market interventions, so we have seen rapid rises and falls throughout the month. This is a challenging environment for contracting as retailers are offering only short validity on pricing offers or pulling prices in response to sudden upward market movements. Many businesses have held off on contracting in the hopes that the market would fall before the end of the year, therefore the increased buying activity also has the potential to increase prices. Retailers are reporting that there are a variety of contract lengths being signed by customers at the moment, therefore as always the contracting strategy depends on the needs and risk appetite of each organisation.
- The Victorian state government has announced that they will renationalise parts of the states energy system, revive the State Energy commission and will invest in publicly owned renewable generation if Labor is re-elected at the upcoming state election. Press release, AFR
- Part of the announcement included a commitment to legislate a 2035 emissions reduction target and bring their net zero target forward 5 years to 2045.
- Callide Power station in Queensland suffered a series of outages in recent days. The cooling tower of one unit suffered a “structural failure” on October 31st, which will see the unit offline until January. A few days later two other units tripped leaving the entire power station offline for 3 hours. ABC
- The fourth unit is offline from a catastrophic failure in May last year, and won’t return to service until April 2023 at the earliest. WattClarity
- Opinion piece – Time for two sensible gas market interventions. AFR
Renewable Energy News
- Solar inquiries have increased dramatically following the Federal budget which predicted a 56% increase in electricity prices in the next 2 years. AFR
- Solar (both distributed and large-scale) met more than 100% of South Australia’s demand during the day on Sunday 16th of October. Gas generation was still required to ensure grid stability. RenewEconomy