All the way through Tuesday, we were marvelling at the crazy-low prices that generators across the National Electricity Market were receiving for generation dispatched into the market – and particularly in South Australia and Queensland.
This NEM-Watch snapshot at 12:10pm yesterday highlighted prices really in the doldrums in those two outer regions:
As shown in this snapshot, the strong output of wind farms across the NEM (but primarily located in the south) was one of the driving factors for the low prices seen in the South Australian region.
We note in this snapshot that the NEM-wide demand is only barely scraping above 21,000MW – which (as shown in this chart from NEM-Review) is about average for the month, but 2000MW down on the average from several years ago:
Looking to the north, in Queensland we saw that the Brisbane hub gas price in the STTM (Short Term Trading Market) dropped below $1/GJ yesterday, as highlighted in this GasWatch snapshot:
Despite this low price, we see that gas usage yesterday was lower than it was at the end of last week (probably partly the reason that prices are lower). This lower gas consumption at the Brisbane hub is also translated to lower gas burn for power generation in the Queensland region, as shown in NEM-Watch:
Hence, the oversupply of capacity in the NEM is also translating through to low spot prices in the gas market, on occasions. Also to be noted here is that the massive overhang of capacity amounted to a 65 per cent Instantaneous Reserve Plant Margin across the NEM yesterday (more than noted last week).
Such depressing prices are feeding into doomsday predictions for security of supply.
Paul McArdle is the managing director of Global-Roam, a business that provides computer software that helps users to analyse and understand energy markets. This in an edited version of an article originally published by Watt Clarity. Reproduced with permission.