Temperature and Demand Trends
Average Temperatures in New South Wales were hotter during January than other regions in the NEM. Average apparent temperatures rose from December by 2.3 degrees in Queensland, Victoria and South Australia, and 3.3 degrees in New South Wales.
In all regions except Queensland, maximum temperatures in January 2019 were significantly higher than both December (up to 9 degrees) and January 2018 (up to 8 degrees). Queensland’s maximum was cooler by 4 degrees compared to December.
In Adelaide, the previous temperature record of 46.1 degrees set in 1939, was broken on the 24 January 2019 when the temperature peaked at 46.6 degrees.
Average and maximum demand increased in January in mainland regions of New South Wales, Victoria and South Australia from the previous month of December as well as January 2018.
Average demand increased by 210 MW (17%) in South Australia from the previous month, while New South Wales increased by 1,142 MW (15%), and Victoria by 439 MW (10%). Maximum demand increased in New South Wales by 2,222 MW (20%) from the previous month, while South Australia increased by 419 MW (16 %) and Victoria by 816 MW (10 %).
Thursday 24 January and Friday 25 January were two days where very high price outcomes occurred in South Australia and Victoria. To maintain System security AEMO were required to intervene in the market by dispatching the Reliability and Emergency Reserve Trader (RERT) mechanism at 14:30 hrs on Thursday 24 January as well as activating reserve contracts from 16:30 hrs. These activities ended at 22:30 hrs the same day. On Friday 25 January AEMO once again intervened in the market by dispatching the RERT which started at 09:00 hrs and continued until 16:30 hrs.There was Actual Lack of Reserve Level 3 conditions on both days which included load shedding.
Supply side factors
Average generation availability improved in all regions in January from the previous month particularly for New South Wales which started the month off with all large thermal power station units being available. Average availability in New South Wales increased by 1,300 MW (11 %) from December. Queensland average availability was also 712 MW higher (7%), as was Victoria by 460 MW (6%), and South Australia by 270 MW (10%).
Even though Victoria and New South Wales average availability was higher, there were forced outages at Yallourn and Loy Yang A power stations in Victoria, and Bayswater, Liddell and Eraring in New South Wales.
Output from Snowy Hydro increased from 164 GWh in December to 238 GWh in January. It is noted that generation during the months of October to January is lower than the winter months as in previous years, but the January 2019 generation of 238 GWh was significantly lower than the January 2018 output of 420 GWh.
Storage levels are still low with Lake Eucumbene at 26.6% of maximum capacity.
NEM Spot Price Outcomes
Average prices in January were the highest in over a year across all regions.
The highest average monthly price was in Victoria at $252/MWh, a $160 increase on the previous month, followed by South Australia at $243/MWh which was a $151 increase on the previous month. The maximum price reached in these regions was the market price cap of $14,500/MWh, and in the case of South Australia was sustained for over 3 hours on Thursday 24 January.
Average RRP by Region
|Month / Region||QLD||NSW||VIC||SA|
February Spot Price Outlook
The availability and performance of scheduled generating units across the NEM has been mixed over recent months with a number of planned and forced outages occurring at coal-fired plants in New South Wales and Victoria. Outages at brown-coal plants in Victoria in the second half of January (where up to 1,400MW was offline) contributed to a shortage in available capacity and the extreme spot price events over the 24th – 25th January during the spell of hot temperatures and high demand in Victoria and South Australia.
The tight supply/demand balance in Victoria and South Australia will persist for the remainder of the summer period leaving these regions exposed to high spot prices. Queensland is well supplied with available coal and gas-fired generation to meet demand requirements, though New South Wales may also experience tight supply conditions should extreme temperatures and demand peaks occur.
The reliability (and availability) of large coal-fired units in New South Wales and Victoria will continue influence spot price outcomes. Unplanned outages may lead to higher spot price levels, particularly if these occur during weekdays when summer temperatures are extreme. Under normal market conditions we expect hydro and gas-fired peaking capacity to contain prices below $300/MWh across all regions.
Increases in renewable generation from new large scale solar and wind in the NEM continued through 2018, though this additional supply has not led to lower underlying spot price outcomes due to the influence of higher priced gas, hydro, and black-coal generation in setting the marginal spot price.
We expect this price trend to continue, though there may be brief periods where high renewable generation exceeds demand requirements resulting in low or negative spot prices. February traditionally see the highest demand peaks across all mainland regions as commercial and industrial demand and school related load returns to normal with the commencement of the school year.
In summary, spot price outcomes over February will be driven by temperature outcomes and the availability of thermal generating capacity, however, we expect Victorian and South Australian daily average prices to remain in a band between $90-$140/MWh, with New South Wales and Queensland spot prices slightly lower in the $80-$120/MWh range. Underlying prices are expected to remain strong due to the continuation of high gas prices, and low water storage levels as dry conditions and low rainfall persists across all regions.