Queensland and New South Wales
Every February, Queensland and NSW experience rising temperatures. It happened again this year – and with it, demand for power increased along with energy prices.
On 12 February, Queensland set a new half-hourly record by hitting 9,369MW of daily demand. NSW came in a close second at 9,148MW.
Victorians struck it lucky this summer as February temperatures were in line with the state’s historical average. The Portland Aluminium Smelter was in limited production and the absence of any exceptionally hot days worked in tandem to keep demand low.
However, in March the average monthly spot price increased due to planned outages at brown coal fired stations. This increase was also in part to the closure of the Hazelwood Power Station at the end of March.
Across a stretch of 40C days in February, energy demand increased – and South Australians experienced an average monthly temperature above the historical average.
Demand peaked at 3,045MW on 8 February – the highest since January 2014. This resulted in the monthly wholesale spot power price averaging $180/MWh – a big jump up from the $84/MWh in January.
In March, the average monthly spot price declined. But periods of extreme price outcomes continued. These high demand periods coincided with the lower generation of wind power and the restricted flow of power along the Heywood Interconnector.
Wholesale power prices by region
To the future and beyond
The following factors are expected to influence spot and contract prices over coming months:
- Hazelwood Power Station closure March 2017: The Victorian market lost 1,600MW of baseload capacity.
- Energy supply solutions: Due to recent spot price volatility, Queensland, NSW and SA are discussing the security of energy for the coming summer. Given its reliance on interconnector flows from Victoria, SA will continue to discuss options around battery-generation supply with state government.
- Pelican Point Power Station deal: Engie and Origin announced a deal to supply gas to the second Pelican Point Power Station (at 240MW) from 1 July 2017. As believed, this operation will be by a fixed price off-take contract with Origin. For SA, this is expected to reduce energy security concerns over 2018 and 2019.
- Nationwide forward contract prices: As we continue through Q2 2017, forward contract prices across all regions continue to increase. This is due largely due to a sharp rise in gas pricing and market uncertainty around the impact of potential shortfalls in supply.