Welcome to our monthly market report for the month of May 2020 and we hope everyone is keeping healthy from the COVID-19 pandemic, and not too badly impacted. This month’s special features include:
a. A summary of the Technology Roadmap released by the Federal Government
b. A pictorial snapshot of the demolition of the chimney stacks at Hazelwood Power Station and a recap of the plant’s history and contribution
c. An update from last month’s assessment of the COVID-19 pandemic impact on the daily demand profile
d. An assessment of the Price Setter results for 2020, in the context of the history dating back to 2009
e. A measurement of the potential additional LGCs that may be created from so-called ‘old’ hydro stations if they exceed their long-term baseline, which they are on track to do so
We have also introduced an “At a Glance” summary page for each Region of the NEM depicting the main 4 or 5 events of the month affecting that Region. There is a common theme that spot electricity and gas prices remain soft, although the forward market for the later years is rising.
The key market highlights are:
a. After three months of the lowest wholesale electricity spot prices since 2015 or 2016, average spot prices increased compared to the previous month for all regions except QLD. The lower spot prices have been driven by large capacity offers in low price bands
b. Spot prices remain in the bottom quartile of our Q2 forecast
c. The average wholesale gas price across the country remain at all-time lows during May
d. After six months of softening prices in the electricity forward market, prices rallied during May for all regions. Our forecast models have been predicting this rally for some time, and now it appears to be happening
e. Average temperatures for May were lower for all regions compared to the same time last year. The aggregate NEM weather exposure increased from 6.8% in April to 9.2% for May.
f. During May there were minimal changes in the share of total NEM generation and base load outages were the lowest level for this time of year, for the last 3-years
e. Above average rainfall for Victoria and southern NSW resulted in a substantial increase in Snowy Hydro’s water storage during May
f. Hydro Tasmania’s water storage increased over the month, despite an increase in dispatched generation during the month
g. LGC spot price rose slightly during the month and the STC price remained flat
Market News items are listed in the report, and late breaking news relate to the potential sale of Infigen Energy while Amaysim has been reported to be saying that they are open to selling its energy business (Click Energy). Origin Energy has been reported as the leading suitor.
On the corporate Power Purchase Agreement landscape:
a. SavvyPlus assisted Procurement Australia to facilitate the establishment the execution of 10-year power purchase agreements (PPAs) with 13 Victorian councils and 1 State Government Authority. Spokespeople from both Alinta Energy and Procurement Australia said they were excited and proud of the agreements. The Bald Hills Wind Farm in Gippsland, an accredited GreenPower generator, will supply large-scale generation certificates to meet the specific renewable energy requirements of each signatory. The agreements are effective from 1 July 2020.
b. Swinburne University announced a 15-year PPA with Infigen Energy using the Cherry Tree wind farm near Seymour in Victoria. It has been reported that the PPA covers 100% of its power consumption with renewable energy. The agreement becomes effective 1 July 2020.