Electricity rates – wholesale rates trended down in all states under review from June through to July 15, with futures prices in South Australia trending 1 percent lower than they were 24 months ago.
The biggest drop in futures prices was registered in Queensland at 6.1 percent. The slide evened out at the beginning of July, tapering off to a drop of 1.8 percent.
South Australia registered a drop of 1.7 percent from 15 June to date, but the trend reversed an a slight increase of 0.3 percent was registered in the first two weeks of July. South Australia became the first state since the energy price crisis kicked in 2 years ago to register a drop in wholesale prices compared to 24 months ago.
Victoria registered a 1.2 percent drop compared to the previous month and the trend continued downwards throughout July with a 0.8percent drop.
New South Wales wholesale electricity prices were 0.9 percent down when compared to the previous month, and the trend accelerated into July with a 4.2 percent drop in the first two weeks of July.
The overall drop in wholesale prices across all states under review was of 2.48 percent.
Futures prices in all states under review were trending down by a few percentage points in June and July, mostly due to the number of large-scale renewable energy projects coming on stream in the first half of 2018.
Interestingly, South Australia has become the first state to bring futures prices down, compared to what they were two years ago.
South Australia continues to bring one renewable energy project after another into the mix, with an ultimate aim of exporting to New South Wales once an interconnector is built between the two states, with a target completion date of 2024.
Energy news this month has been largely related to the whole of Australia, with some good news and some equally bad news.
The good news for energy users all round is that the Australian Energy Regulator has issued new guidelines to ensure that electricity networks bring their transmission prices down. Network tariffs account for between 50 and 70 percent of the average energy bill, so the new guidelines mean that users will save between $30 and $40 per year, according to modelling by the AER.
Another important piece of news for energy users is that the Australian Energy Market Commission began to enforce a new rule in June which prohibits energy retailers from advertising ‘discounts’ which actually left consumers worse off.
In a separate development, the Federal Government has called for an inquiry to stop the practice used by generators to withdraw bids on the wholesale market at the last minute to create artificial scarcity, thereby pushing up prices drastically. Generators ‘game’ the market by re-bidding with a much higher asking price. This practice cost Australians a staggering $3.4 billion between 2013 and 2017.
New South Wales
New South Wales experienced a wholesale electricity price drop of almost 1 percent from 15 June to date. That downward trend accelerated sharply in the first two weeks of July to 4.2 percent.
Prices are still 26 percent higher than what they were in 2016. This is reflected in the rates that are currently being offered by retailers to large market electricity customers in New South Wales.
New South Wales and South Australia are planning to build an interconnector between the two states, which should see exports of wind and solar generation to NSW. On the flipside, if supply is short in South Australia, it will be able to import electricity from NSW, rather than relying solely on the Victoria interconnector.
There has been no further news on the announced renewable energy hubs in three rural areas of New South Wales, but renewable projects continue to grow in Sydney.
The City of Sydney Council has flicked the switch on for 1,600 solar panels and an industrial Tesla Powerpack battery storage unit which is capable of storing 500-kilowatt hours of electricity at the Alexandra Canal transport depot.
Futures prices in Queensland dropped substantially from 15 June to date, at a rate of 6.1 percent. This trend continued through July and prices dropped by a further 1.8 percent in the first two weeks of the month.
The drop was almost exclusively related to the year 2021 and is due to a large number of renewable energy projects coming online in the longer term.
Prices are still 4 percent higher than what they were in 2016. This is reflected in the rates that are currently being offered by retailers to large market electricity customers in New South Wales.
Queensland has been the dark horse in the race to drive electricity prices down. The state’s wholesale prices were substantially more expensive, and demand is satisfied largely by black coal generation (6,300MW). Queensland was the worst state to be hit by energy ‘gaming’ and estimates show that it cost the state $2.3 billion over a four year period.
The main culprits were state-owned energy generators Stanwell and CS Energy. The State Government intervened and Energy Minister Josh Frydenberg said that prices had dropped 25 percent since then.
Queensland also has 2,093 MW of renewable energy projects currently under construction.
South Australia became the first state in the Commonwealth to experience a wholesale electricity price drop, which took futures to pre-energy crisis rates. The state recorded a drop of 1.7 percent since 15 June, with futures prices are now 1 percent cheaper than they were 24 months ago. The trend was bucked slightly in the first couple of weeks of July, sneaking back up by 0.3 percent.
South Australia was another state that fell victim to ‘market gaming’, with the practice costing energy users $450 million dollars between 2013 and 2017.
As mentioned earlier in this rates update, South Australia is currently in discussions with New South Wales to build an interconnector between the two states.
South Australia is regarded as one of the world leaders in renewable energy projects with 664 MW of wind and 175 MW of solar generation in the state. However, it is still reliant on costly gas generators, which supply in the region of 600 MW of power.
The state has a huge pipeline of solar, wind and battery storage projects lined up as the cost of building them continues to drop sharply.
Victoria experienced a wholesale electricity price drop of 1.2 percent from 15 June to date. That downward trend tapered off to 0.8 percent in the first two weeks of July. Like Queensland, the drop was almost exclusively related to prices in 2021.
Victoria continues to be plagued by the ghost of Hazelwood though, and prices for futures remain high and are still 56 percent more expensive than they were two years ago.
These factors contribute towards the rates being offered by retailers to large market electricity customers in Victoria. There has been some respite from the fact that there are a number of solar farms and battery storage projects under construction in Victoria this year. This trend continues from last year when Australia led the world in battery storage capacity installations.
On the other hand, Australia has been slammed by international reports for energy efficiency and we placed close to last in rankings relating to the developed world. The report stated that Australia had one of the worst energy policies in the developed world.