Energy Market Update July

New South Wales

With the coal cap expiring last month on 30th June, there is concern that coal pricing could increase as winter continues and the reliance on coal increases.

Given New South Wales is 73% reliant on coal, any movements in the wholesale price can directly affect pricing. For example, we saw coal get to $400/tonne in the second half of 2022, producing rates in the 30’s c/kWh.

We advise taking advantage of the current market stability now if you need to.

Queensland

With the coal cap being lifted on 30 June and a lack of gas reserves available, there is a strong likelihood for increases in electricity pricing for large market businesses as we move through the remainder of the year.

Gas, which makes up 8% of the QLD generation during normal demand periods, is currently running at heightened demand, more than previously forecast. With demand being so high and so early in winter, it’s a concern when coupled with the volatile nature of coal wholesale prices.

We advise taking advantage of the current market stability now if you need to.

South Australia

South Australia’s generation is made up of 32% gas and heavily reliant on NSW & QLD markets. Because 66% of its energy mix is sourced from renewable generation, if the sun isn’t shining and the wind isn’t blowing, the state relies more on coal and gas.

There are real concerns that if gas demand gets worse, the electricity market in South Australia will respond accordingly and there will be significant increases.

We’re unsure of what the future holds for South Australia, but with the market stabilising over the last six weeks, you may want to take advantage of the current market stability if you need to.

Tasmania

The Tasmanian market is holding constant. Wind generation is down but still steady, with Hydro making up the shortfall.

Pricing is good and we expect the market to stay steady through winter.

Large market - Gas

Right now, gas reserves are being used to produce electricity, which is concerning so early into winter. Additionally, as gas is expensive to acquire, this means electricity average prices are more expensive as a result. The less gas reserves there are, the more expensive gas prices are for businesses. It’s important to note, the east coast relies on gas when it gets extremely hot and cold, ie. when there are multiple days above 40 degrees in a row. As gas is more reliable, our reliance will only increase going into the warmer months.

Gas is currently the lowest it’s been in over 2-years with it flooding the market currently, this is likely to flip when the demand outweighs the supply in the short-term. Review your contract now or explore forward-contracting.