The National Electricity Market is the spot market where the supply of electricity and the demand for electricity by consumers is matched. It’s where electricity retailers buy from. Generators supply the market with electricity and respond by submitting offers for supply every five minutes, every day. The meeting of supply and demand determines the spot price every half hour. It’s a commodity like water, lentils and many other inputs on the average farm. Below, you’ll see this in action during the last 12 months in Victoria.
A quick overview for September
The wholesale spot market in September saw power demand levels stay consistent compared to this time last year, the milder than average weather conditions in Victoria and SA, meant lower demand in those states.
In September, weather conditions were warmer and drier than average across the northern states, with areas of Queensland and NSW setting temperature records, including Queensland’s second-warmest September on record. The hot conditions in Queensland at the end of the month saw a new half-hourly demand peak over 500MW higher than the previous peak set in 2016.
Key influences of electricity spot market outcomes in September included supply-side factors, such as; planned and unplanned outages at coal-fired power stations in NSW and Queensland, higher wind generation resulting in less gas-fired generation in SA, and a stronger run of river hydro output in Tasmania due to good rainfall.
Average electricity spot prices in September remained above 8c/kWh in Queensland, as lower demand into spring was offset by less coal-fired supply. NSW prices eased to 8.7c/kWh as the weather turned warmer, while significantly higher wind farm output in the south-eastern states saw Victoria prices fall to 7.9c/kWh and 7.2c/kWh in SA.
Your market outlook
Over coming months, electricity spot market and fixed contract prices will be impacted by several factors. Usually, October is a windy month and gas prices are trending lower so it is reasonable to expect spot prices to sit around 6-8.5c/kWh through to mid-November.
Weather patterns are indicating warmer than average conditions over south-eastern regions of Australia later in the year, so prices could rise mid-November to mid-December. Items to watch during the next quarter will be the NSW black coal generators, the installation of new Tesla/Neoen battery in SA due late November and the beginning of AEMO and ARENAs demand management programs in December.
Buy Better Power
For many years businesses have had no choice but to sign fixed-rate contracts for electricity. But it’s a commodity and it’s traded on a spot market. Flow Power is working with the agricultural sector to give them access to that market. Those who bought wholesale power in the twelve months until August 2017, would have paid prices around 11% below the fixed contract rates.