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September 2020 Energy Market Review

It has been a busy September 2020 for the Australian energy market. Energy futures prices fell from mid-September as the Morrison Government announced a suite of policies to support the ‘gas-led recovery’. Meanwhile, in the NEM, records continued to tumble as windy and sunny conditions allowed the growing renewables fleet to show us what it can do. Wind, solar and hydro supplied almost 53% of NEM demand in the middle of the day on October 2nd with 30% of that coming from rooftop solar. Prices are low reach out to us now.

Indicative RatesNSWVICQLDSA
Peak6.0 c/kWh4.7 c/kWh5.1 c/kWh6.0 c/kWh
Off-Peak4.9 c/kWh3.8  c/kWh3.9 c/kWh4.7 c/kWh

*Based on offers we have seen in the last week. 

New South Wales

September 2020 -NSW Energy Futures Prices
  • Energy futures prices fell and are trading under $55/MWh for all periods
  • 2022 prices are the lowest having fallen 5% to $50.75/MWh
  • 2021 fell 4% to 53.20/MWh while 2023 is down 6% to 53.97/MWh

How did supply and demand affect price?

  • NSW saw its own renewables record set at 1 pm on October 4 when renewables supplied over half of the demand for the first time (50.2%), the majority form rooftop solar (28.4%)
  • Demand has been moderate reaching 10255 MW and spot prices soft (-$3.56/MWh to $299.99/MWh)
  • The Morrison Government has intervened in the much-anticipated closure of the Liddell Power station slated for 2023 saying it will build a new gas-fired power station if the market fails to detail plans to replace the 1000MW capacity that will be lost.


September 2020 -VIC Energy Futures Prices
  • 2021 contracts dipped 8% since the end of August to $54/MWh but remain substantially more expensive than the later years 
  • 2022 and 2023  are both sub $45/MWh for the first time having dipped around 5% toward the end of September 

How did supply and demand affect price?

  • Victoria experienced record low operational demand of 2690MW on September 6th at 1:35 pm accompanied by negative prices in the -$40/MWh range.
  • Low operational demand in the middle of the day is attributed to rooftop solar. As such overall demand has not necessarily dropped but an increasing portion of it is being met ‘behind the meter’


September 2020 -QLD Energy Futures Prices
  • Energy futures prices for all periods remain tightly consolidated 
  • Prices rose throughout the first half of September before falling ~6% in the second half
  • Contracts for all periods are around $40/MWh which is roughly where they were trading at the beginning of the month

How did supply and demand affect price?

  • Solar is pushing prices very low during the day between 8 am and 5 pm. The volume-weighted average price for September was ~$15/MWh 
  • The state is currently oversupplied with coal and renewable capacity and this coupled with low gas prices is putting downward pressure on spot and futures prices
  • Lower energy prices are a welcome relief for businesses but in the long term prices, this low creates investment risk and may drive early closures of the thermal fleet.

South Australia

September 2020 -SA Energy Futures Prices
  • 2022 are down 8% over September to a new low of $45.50 after trading in a flat trend since early July
  • 2021 prices are down 9% since the end of August to $51/MWh
  • 2023 is late to the party showing some signs of a dip at the beginning of October 

How did supply and demand affect price?

  • New minimum operational demand records are becoming the norm in South Australia with another one set on September 13th at 367 MW
  • The state’s large and growing rooftop solar capacity is driving these lows which are often accompanied by negative spot prices (they went as low as -$528.50 in September)
  • Renewables generated 73% of local demand for the month of September.
  • SA supplements its renewable generation primarily with gas and is thus also benefiting from low gas prices associated with the pandemic. 

We can see from the September 2020 energy market that Australia’s energy landscape is in a period of transition and the pace is taking many by surprise. As we come into summer we will increasingly see the effects of the solar capacity that has been added throughout the year. There is still a great deal of uncertainty as to how grid operators will manage increased variable generation and low operational demand. As always our energy experts will be available to help you navigate the changes.

Act now to lock in low energy prices – contact one of our Energy Experts today!

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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0412 676 114
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