March 2024 Electricity Market Review

Market Commentary

Electricity prices remained reasonably flat throughout March 2024 with a minor uptick for the next three calendar years in South Australia, Victoria, and Queensland. 

The National Energy Market prices remain low, however, sitting around the lowest point in the last 2 years. 

As an electricity customer, you can lock in forward pricing if you put a tender to market, even if you are under a contract. The forward contract is set to begin the day after your current contract expires. 

Prime Minister announces $1 billion Solar Sunshot subsidies and grants scheme

Prime Minister Anthony Albanese has announced the $1 billion Solar Sunshot subsidies and grants scheme to establish Australia’s domestic solar supply chain.  

Marking the significant pre-budget announcement from the coal-rich region of New South Wales, Mr Albanese stressed that Australia should not find itself as the final link in a global supply chain based on an Australian innovation.  

The announcement comes after the initial findings of the groundbreaking $1.2 million Silicon to Solar Study, which was published in February. This study serves as a road map to guide Australia in establishing its own solar industry.  

The announcement was made at the same time as the publication of a Climate Council report urging emissions cuts and a net zero by 2035 with “no excuses”.”  

He delivered a speech at the recently shuttered Liddell coal-fired power station, which AGL Energy and SunDrive hope to turn into a solar manufacturing plant. 

AGL and Sundrive to explore creation of solar manufacturing facility at Liddell site

AGL Energy and SunDrive’s collaboration was formalised through a memorandum of understanding, and it coincided with the federal government’s unveiling of the $1 billion Solar Sunshot programme. 

The Liddell Power Station, which boasted four 500 megawatts (670,000 hp) EE steam-driven turbine alternators, provided a combined electrical capacity of 2,000 megawatts (2,700,000 hp).  

Unit 3 was taken out of service on 1st April 2022, followed by the decommissioning of Units 1,2 and 4 in April 2023. 

The collaborative study with SunDrive will delve into the necessary infrastructure and engineering requirements, as well as identify the regulatory approvals and licenses needed to develop, build, and operate a large-scale solar cell manufacturing facility within the Hunter Energy Hub Advanced Manufacturing Precinct. 

As part of this agreement, they will also explore the possibility of establishing a contract for AGL to purchase SunDrive’s solar panels, thus providing direct access to customers for these Australian-designed and manufactured PV panels through one of the nation’s largest solar distributors and installers. 

SunDrive’s plans involve constructing factories capable of producing up to 5GW of Australian-made solar PV annually, with a primary focus on the premium rooftop market.   

Hard-hitting Climate Council Report says Australia must reach net zero by 2035 

A hard-hitting Climate Council Report asserts that Australia must reach net zero emissions by 2035 with “no excuses”, using proven and available technologies and setting and sticking to sensible policies. 

The Climate Council’s Seize the Decade blueprint outlines how Australia can slash emissions by 75% by 2030 and achieve net zero by 2035, aligning with global climate safety.  

Key strategies include: 

• Leveraging renewables for 94% of grid electricity. 
• Scaling up rooftop solar. 

• Cutting industrial emissions by over half. 
• Decarbonising transport. 

The roadmap emphasised the feasibility and urgency of adopting decisive policies and technologies. 

The plan said Australia must accelerate the ongoing phase-out of coal, oil, and gas across all sectors of the economy. 

Australia must then transition towards renewables, storage, and electrification in logical and economically beneficial ways. 

The Climate Council report said that Australia must avoid relying heavily on land-based carbon offsets or unfulfilled technologies like carbon capture and storage, nuclear energy, or hydrogen for home use.   

Keeping Eraring open beyond 2025 is “unconscionable”  

Delaying the closure of Origin Energy’s Eraring coal power plant would be “unconscionable” given that a new report finds that it would cost up to $150 million per year in taxpayer funds. 

The 2.88-gigawatt power plant is the biggest in the country and is slated for closure in August 2025. The NSW government is worried that if the plant closes, the state will be at risk of blackouts and energy price hikes. 

The report compiled by Climate Energy Finance found that there will be no reliability gap once the plant closes and that keeping it open is simply not the right thing to do, given the “massive handouts and windfalls” enjoyed by the owners.  

The report’s modelling calculated that the $150 million per year price tag to keep it open beyond 2025 will equate to more than six times what NSW has spent in the past four years electrifying and solarising social housing.  

AEMO’s warns of looming gas shortages

Australia is bracing for potential gas shortages expected to start in 2025, with the Australian Energy Market Operator (AEMO) raising concerns about supply gaps and the need for urgent action to counter shortages due to peak demand days.  

In its annual gas statement of opportunities report, AEMO said “small seasonal supply gaps” may emerge from 2026, with the shortages becoming annual ones from 2028 unless additional supplies are developed.  

Regions affected include New South Wales, Victoria, South Australia, Tasmania, and the ACT. 

The projection stems from production in the Bass Strait declining faster than the rate of demand reduction.  

With two-thirds of gas production on the East Coast allocated for exports, mainly from Queensland, a quicker reduction in domestic demand must be achieved to prevent future shortages. 

Alternatively, additional supplies will be needed, or more gas must be transported southwards. Gas shortage predictions have been a consistent aspect of AEMO’s yearly reports for the last decade, as the market operator aims to pinpoint and resolve gaps in supply. 

The AEMO report emphasised the importance of ensuring that all southern gas storage facilities are fully stocked before winter and continuously monitoring depletion rates to mitigate shortfall risks.  

The shift towards renewable energy sources and increased electrification has contributed to decreased gas demand.  

However, the decline in gas production has outpaced the reduction in demand, leading to anticipated supply gaps. 

If you require assistance with obtaining and comparing electricity or gas plans, contact our team of energy specialists now. We can help you strategise for future contracting and secure the best plan for your business. Get in touch today!

New South Wales

Average Movement Summary:

New South Wales electricity futures prices started the month at $91/MWh, hovering around the same mark before closing at $90.50.

Prices for 2025/26 followed the same trend but at a higher cost. Prices have come down since the crisis in October 2022 and are $20/MWh cheaper 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:

• The volume-weighted average price on the spot market dropped substantially from $111/MWh in February to $70/MWh by the end of March.
• Spot prices are higher than March 2023, when the spot price was $116/MWh.
• March was a stable month for spot prices in NSW. The highest price fetched on the market was $299/MWh. The bulk of trading took place at around the $70/MWh mark. Incidents of negative pricing were around, with a maximum low of -$62/MWh.
• Renewables share in March increased slightly from 34.8 percent to 35.2 percent. Reliance on gas increased to 1.6%. Coal contribution dropped marginally to 63.1%.
• Batteries remained at a contribution of 0.2% of the state’s energy at an average of $115/MWh. Gas generation traded at an average of $483/MWh (gas). Renewables cost an average of $55/MWh, and coal $76/MWh.

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

Victoria

Average Movement Summary:

Victoria futures prices opened the month at $56/MWh, on a downward trend from last year. Prices remained mostly settled and closed the month slightly higher at $58/MWh. Prices for 2025 and 2026 followed the same pattern but at a higher cost.

Electricity prices have come down significantly since the crisis in October 2022 and are $16/MWh cheaper 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:

• Victorian average spot prices dropped from $83/MWh in February to $51/MWh in March. Spot prices are cheaper than in the same period for 2023, when the average price was $62/MWh.
• Victoria also experienced a stable spot pricing month, but there were two instances where pricing went over $1,000/MWh. The bulk of trading occurred around the $50/MWh mark.
• Incidents of negative pricing dropped to around 1,500. There were 25 instances where pricing dropped below the -$100/MWh and a maximum low of -$208/MWh.
• The share of renewables generation dropped slightly from 39 percent to 37.6 percent. Coal generation increased from 60% t0 61.4. Gas generation halved from 1.6 percent to 0.8 percent.
• Battery supply accounted for 0.3% of electricity, and generation cost an average of $113/MWh. Renewables cost an average of $41/MWh, while coal cost $60/MWh and gas was at $179/MWh.

Queensland

Average Movement Summary:

Queensland futures prices opened at $90, remaining stable and closing at $89/MWh to close off the month. Prices for 2025 and 2026 followed the same trend.

Electricity prices have come down since the crisis in October 2022 and are $17/MWh cheaper 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 spot prices dropped significantly from $119/MWh in February to $74/MWh in March. Queensland spot prices are significantly cheaper than they were in February 2023, when the average price was $123/MWh.
• Queensland also experienced a relatively stable month with the highest spot prices set at around $300/MWh. There were relatively few negative pricing events, with a low of -$45/MWh. The bulk of trading occurred at the $70/MWh mark.
• Renewables started the year poorly but climbed slightly from 26.9 percent to 27.5 percent. Coal generation rose to 67.4 percent contribution. Gas generation dropped by 3 percent to 5.2 percent.
• Batteries supplied 0.1% of total generation. Battery energy cost $126/MWh in March. Gas averaged a cost of $103/MWh, coal $76/MWh and renewables $48/MWh.

South Australia

Average Movement Summary:

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

Prices started the month at $71/MWh, ending the month at $74MWh. Prices for 2025 and 2026 were flatter but slightly more expensive than 2024.

Prices have come down substantially since the crisis in October 2022 and are $29/MWh cheaper 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 increased slightly from $66/MWh in February to $70/MWh in March.
• Prices are similar to the same period last year when prices averaged $65/MWh.
• South Australia experienced 5 instances where pricing hit $9,000/MWh in March, with a high of $9899/MWh.
• 1,500 negative pricing incidents were recorded, with 20 instances below -$100/MWh and a low of $190/MWh.
• Renewables dropped to 77 percent of total generation Gas generation increased to 22 percent to make up for the drop in renewables.
• Battery increased marginally to 1% and averaged a cost of $164/MWh. Gas costs an average of $134/MWh, and renewables at $55/MWh.

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! 

We hope you have found our electricity market update for March 2024 informative and helpful. We understand that these are challenging times, and we are here to support you. If you would like to delve deeper into the energy market’s previous months, you can find our monthly energy market reviews here.   

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.

We source, analyse, compare and rank commercial, industrial and multisite energy quotes. Obligation Free.

Chat with one of our experienced consultants today and get the insights your business needs to help manage the risk associated with volatile electricity and natural gas markets. Our energy procurement service is obligation-free and provides a time-saving way of securing lower energy rates from our panel of fifteen energy retailers.