October 2024 Electricity Market Review

Market Commentary

The fragility of Australia’s energy grid infrastructure came under the spotlight in October when Broken Hill suffered a prolonged outage caused by extreme weather events. These events led to damage to transmission towers and the failure of a backup diesel generator, highlighting vulnerabilities in the grid. 

This disruption contributed to increased volatility in the spot market, with New South Wales (NSW), Queensland, and Victoria all recording higher prices compared to the previous month. 

Spot prices also started picking up as electricity demand increased as hotter temperatures became the norm. Futures prices followed a similar trend. NSW and Queensland experienced increases while Victoria remained on par with the previous month and SA registered a small drop. 

Broken Hill Blackout Incident and Investigation 

On October 17, 2024, a severe storm in South Australia caused extensive damage near Broken Hill, toppling seven transmission towers and disconnecting the region from the main electricity grid.  

The ensuing blackout was worsened by complications with local backup systems: one diesel generator was non-functional, and the remaining generator struggled to meet demand, resulting in repeated power outages.  

Adding to the disruption, TransGrid, the transmission operator, disabled the Broken Hill battery—capable of supporting the grid—to prioritize future use for a compressed air storage project intended to enhance grid resilience. 

The Australian Energy Regulator (AER) has initiated an investigation into the blackout, focusing on potential breaches of market rules and evaluating the actions of key operators, including Transgrid and Essential Energy.  

Delays in connecting the Broken Hill battery to diesel generators, due to technical challenges, further hindered the region’s power supply recovery. 

New South Wales (NSW) experienced a significant drop in market demand, setting a new low and initiating several record-setting days for the month. 

The backup generator (GB01) tripped multiple times, causing intermittent power outages in Broken Hill. 

(Learn more about the Broken Hill power outages here.) 

NEM volatility highlighted at All Energy Conference 

The National Energy Market’s volatility was highlighted at the All-Energy Conference in Melbourne in October. 

Pan Galanis from Akaysha Energy – a battery storage provider – spoke about the challenges and opportunities in the National Electricity Market (NEM). 

He said the NEM is the world’s most volatile electricity market. With its energy-only market design and aging infrastructure, the NEM experiences price fluctuations every five minutes, creating a dynamic and highly erratic operational environment. 

Galanis also noted the difficulties that this volatility brings. Predicting long-term revenue over a 20-year project lifespan is challenging due to constant price changes and a developing contract market, complicating the formation of stable, long-term agreements.  

Record lows for operational demand and coal output 

Australia’s electricity grid hit record lows in operational demand and coal output in late October 2024, mainly due to high rooftop solar generation in spring’s optimal conditions.  

The NEM saw demand drop to 10,073 MW, with New South Wales falling to 3,121 MW, pushing coal output to unprecedented lows.  

Rooftop solar covered 54.6% of demand across the NEM and 58.9% in NSW. The Australian Energy Market Operator (AEMO) warned that this reliance could threaten grid stability, prompting “Minimum System Load” alerts and plans for rooftop solar switch-offs and battery solutions across states to manage excess solar production. 

Baseload coal and peaking gas “outdated” – AEMO 

AEMO also said Australia’s reliance on “baseload coal and peaking gas” is outdated. 

AEMO chief Daniel Westerman. Said the NEMI must shift from coal and gas toward lower-cost renewables, supported by storage solutions like batteries and pumped hydro. 

Westerman called for immediate investment in renewable energy, storage, and transmission infrastructure, emphasizing that collaboration across sectors is essential for a reliable, affordable, and sustainable energy future in Australia. 

A report by the Institute for Energy Economics and Financial Analysis (IEEFA) suggests gas will serve only as a costly “peaking” resource, operating just 7% of the time to meet peak demand.  

This limited use could raise electricity costs by 41-81% by 2030. With declining battery costs and improved storage options, IEEFA advises caution, noting that gas may struggle to remain economically viable in a renewables-dominated grid. 

Increasing importance of renewable energy source 

A report by Rystad Energy established that September 2024 was a record-breaking month for renewables in Australia, with utility solar and wind generating 4,518 GWh, a 20% increase from September 2023.  

Wind energy excelled, particularly in Victoria, which produced nearly a third of the nation’s renewable energy, totalling 1,337 GWh. 

Victoria’s eight wind farms ranked in the top 20 nationally, although Tasmania led with the top four wind assets, including Granville Harbour and Musselroe. 

Wind generation nationwide reached 3,363 GWh, surpassing the previous record. Queensland dominated solar performance, hosting 14 of the top 20 solar assets, with Edenvale Solar Farm leading at a 33.8% capacity factor. 

The NEM and the Wholesale Electricity Market (WEM) saw record negative pricing hours, totalling 1,375 hours, with South Australia in negative territory for 43% of the month. 

Additionally, renewable capacity grew significantly, surpassing 4 GW over the last 12 months. Battery and pumped hydro storage hit a high of 292 GWh, while coal generation in the NEM fell to a record low of 8.64 TWh. 

Australia drops out of Top 10 for solar installations 

In 2023, Australia dropped out of the top ten countries for new solar installations for the first time since 1992, despite record solar output. According to the IEA PV Power Systems (PVPS) Trends Report, Australia added 4.2 GW of solar capacity, but utility-scale installations fell by 24%, reaching a five-year low of 1.05 GW.  

The Australian Photovoltaics Institute (APVI) attributes this slowdown to the 2020 end of large-scale renewable support and grid connection issues.  

To boost growth, the federal government’s Capacity Investment Scheme aims to add 12 GW of renewable capacity. Expanding both rooftop and utility-scale solar remains crucial for Australia’s net-zero goals. 

New Renewable Projects online and in the pipeline 

Edify Energy’s Muskerry solar battery project, a 250 MW solar farm with a 200 MW/800 MWh battery, recently secured Victorian planning approval and awaits federal review due to potential impacts on local eucalyptus trees and grasslands.  

Located east of Bendigo, the project spans 400 hectares with 500,000 solar panels and will connect to AusNet’s 220 kV line. Once operational, it aims to power 93,000 homes and cut CO₂ emissions by 521,000 tons annually, with the potential for agri-solar practices like sheep grazing. This development highlights central Victoria’s expanding renewable energy presence alongside projects like the 140 MW Axedale and 500 MW Cooba solar farms. 

In Queensland, the MacIntyre wind farm—Australia’s largest at 923 MW—has begun exporting power. Spearheaded by Acciona Energia and Ark Energy, it will double Queensland’s wind capacity by late 2025, supporting industrial sectors and regional economic growth. 

Meanwhile, Amp Energy’s 150 MW, 300 MWh Bungama battery near Port Pirie marks the first phase of a $2 billion renewable series in South Australia, aiming to reach 100% renewables by 2027. Supported by Wärtsilä, the project is part of a broader battery and solar network, with plans to produce green hydrogen at Cape Hardy, boosting South Australia’s clean energy goals and job market. 

New South Wales

Wholesale Electricity Base Load Futures:

*The ASX has ceased to report on electricity futures prices for the year 2024. As a result, reporting now covers the years 2025, 2026, 2027

Average Movement Summary:

 New South Wales electricity futures prices for 2025 began the month at $115/MWh and steadily rose throughout October, finishing at $121/MWh 

Prices for 2026/27 followed the same trend. Prices have dropped significantly since the crisis in October 2022 but are still $3/MWh costlier than the same period last year.  

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!  

Commentary:

• New South Wales spot prices increased substantially from $58/MWh in September to $77/MWh in October.  
• Electricity spot prices in October 2024 were higher than in September, when the average price was $42/MWh. 
• September saw three instances of high pricing above $10,000/MWh with the highest being $13,980/MWh.  
• The bulk of the trading took place at around the $70/MWh mark. Incidents of negative pricing decreased to around 1,000, with a maximum low of -$999/MWh.  
• Renewables shares in October 2024 climbed from 41.5% of the energy mix to 43%. Reliance on gas dropped from 1.5% to 0.5%. Coal contribution dropped from 57% of the generation mix to 56%. 
• Battery contributions dropped from 0.07% to 0.04%, costing an average of $156/MWh. Gas generation remained stable at $156/MWh. Renewables increased from an average cost of $39/MWh to $51/MWh and coal also increased from $79/MWh to $90/MWh. 

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!  

Victoria

Wholesale Electricity Base Load Futures:

*The ASX has ceased reporting on electricity futures prices for the year 2024. As a result, reporting now covers the years 2025, 2026, 2027

Average Movement Summary:

Victoria futures prices opened the month at $72/MWh, dipping slightly to hover around $70/MW before climbing back up again slightly to close the month at $71/MWh. Prices for 2026 and 2027 followed the same pattern but at a cheaper cost.  

 Electricity prices have fallen significantly since the crisis in October 2022, but they are still $3/MWh higher compared to the same period last year. 

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!  

Commentary:

• Victorian average spot prices increased slightly from $17/MWh in September to $20/MWh in October. 
• Electricity spot prices are on par with 2023 for the same period at 17/MWh.  
• Victoria’s spot pricing was very calm and flat during October. The highest spot price was only $440/MWh. The bulk of the trading occurred around the $18/MWh mark.  
• Incidents of negative pricing decreased from around 4,000 to around 3,000 with a low of -$1,000/MWh. 
• The share of renewables in generation climbed from 43% to almost 48%. Coal generation dropped from 57% to 52%. Gas remained stable at 0.3% of the generation mix.   
• Batteries did not feature in Victoria’s October energy mix. The average cost of renewables dropped to a staggeringly low 50c/MWh. Coal cost an average of $34/MWh and gas increased from $125/MWh to $137/MWh.  

Queensland

Wholesale Electricity Base Load Futures:

*The ASX has ceased to report on electricity futures prices for the year 2024. As a result, reporting now covers the years 2025, 2026, 2027

Average Movement Summary:

Queensland futures electricity prices for 2025 opened at $101 at the start of October, climbing to gradually to close the month at $108/MWh. Prices for 2026 and 2027 followed the same trend but at a cheaper cost.  

Electricity prices have come down since the crisis in October 2022 but are $13/MWh costlier than the same period last year.  

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!  

Commentary:

• Queensland electricity spot prices increased from $49/MWh at the end of September to $71/MWh by the end of October.  
• Queensland spot prices are significantly costlier than they were in October 2023, when the average price was $37/MWh.  
•  Queensland experienced two extreme pricing events at $10,000/MWh. 
• There were around 2,000 instances of negative pricing with a low of -$63/MWh. The bulk of trading occurred at the $65/MWh mark.  
• Renewables in Queensland performed poorly in 2024 but picked up in the second half of the calendar year. Renewables share increased from 32.5% to 37%. Coal generation dropped slightly from 61% to 60%. Gas dropped from 8 5.6%% of the energy mix to 5.2%. 
• Batteries supplied 0.09% of total generation. Battery energy average costs increased from $155/MWh to $192/MWh. Gas averaged a cost of $130/MWh, coal $86/MWh and renewables increased from $6/MWh to $16/MWh.  

South Australia

Wholesale Electricity Base Load Futures:

*The ASX has ceased to report on electricity futures prices for the year 2024. As a result, reporting now covers the years 2025, 2026, 2027

Average Movement Summary:

As usual, South Australia’s wholesale electricity futures prices for September 2024 displayed a different trend to other states, due to its different energy mix, of which the majority are renewables and the rest gas.  

2025 futures started the month at $104/MWh, dropping through the month to close the month at $101/MWh Prices for 2026 and 2027 were initially significantly cheaper. 

Prices have come down substantially since the crisis in October 2022 and are $32/MWh costlier than last year.  

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!

Commentary:

• SA’s average electricity spot prices dropped significantly from $80/MWh in September to $35/MWh in October 2024.  
•  Electricity spot prices in October 2024 were more than double what they were during the same period last year, when they averaged $15/MWh. 
•  Known for its pricing volatility, South Australia (SA) saw electricity prices spike to $17,599/MWh on two occasions, just under the market cap. Additionally, there were 8 other instances where prices neared $10,000/MWh. 
• Around 3000 negative pricing incidents were recorded during July 2024 with four incidences of pricing falling to -$999.  
• Renewables’ share of the mix climbed slightly from 85.5% to 87%. Conversely, gas generation shrank from 17% to 11% of the generation mix.  
• Batteries contributed 0.06% and for the first time on record, averaged a negative cost of -$26/MWh. Gas cost an average of $106/MWh, and renewables dropped from an average of $8.70/MWh to $5.57/MWh.  

Take Control of Your Energy Costs 

There is also a lot of activity in the wholesale futures market as the calendar year draws to a close. Many businesses and industrial energy users are going to the market to make forward purchases of wholesale electricity while prices are relatively soft.  

It is worth observing that businesses can go to the market to secure a new contract in advance, even if their current electricity contract is still in effect. 

Depending on your business’s risk appetite, now could be a good time to secure a new energy contract. 

Act now! Reach out to one of our experienced energy consultants today and gain valuable insight into the potential costs that may lie ahead. Don’t wait—take control of your energy expenses now! 

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Expert Advice: Our team of energy consultants has in-depth knowledge of the energy market and can provide tailored advice to suit your business needs. 

Cost Savings: Learn how to reduce your electricity costs and improve your business’s energy sustainability. 

Proactive Planning: Stay ahead of market changes and make informed decisions with our comprehensive market updates. 

Contact our team for advice on reducing electricity costs and improving your business’ energy sustainability. We are here to assist you and explore your options together. 

Explainer:  Why we focus on Wholesale Futures Prices

Wholesale Futures Price: This reflects what the market expects wholesale electricity spot rates to be in future periods. The offers that commercial and industrial (C&I) customers receive via Leading Edge Energy are closely correlated to wholesale prices on the ASX Energy futures market; this is why we focus on these prices in our commentary.

Spot Price: This represents how much the spot market is charging for electricity currently based on demand and supply. Spot prices go up when demand is high and supply is tight. You can view live Spot Prices here. 

You can learn more about the difference between wholesale electricity futures and spot prices in our blog section.

Disclaimer: The information in this communication is for general information purposes only. It is not intended as financial or investment advice and should not be interpreted or relied upon as such.

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