Energy Market Update – a spot market snapshot from 30 March to 31 July 2021
In 2020 alone, over 23K Aussie households installed a solar battery. According to the most recent Clean Energy Council stats, this added 238 MWh (Megawatt-hour) of household solar battery capacity, further boosting Australia’s renewable energy revolution.
This is relevant because a continuously increasing uptake of renewable energy generation sources is pushing down wholesale electricity costs – not only for solar and battery homeowners, but for everyone connected to the grid. The Australian Energy Regulator (AER) reported wind and solar have cut wholesale prices to their lowest since 2015. Another analysis carried out by the Victoria Energy Policy Centre in 2019, claims solar PV pushed down wholesale electricity prices by $5.1/MWh as a net benefit for all grid consumers.
Researchers and economists alike seem to agree that we should challenge the thought of renewable energy generation necessarily increasing the wholesale prices we pay.
So… are electricity prices still rising?
First of all, it’s worth to mention prices in Australia’s National Electricity Market (NEM) are determined by a somewhat complicated bidding process. In essence, power generators place bids for supplying electricity to meet the expected demand in the grid for a particular period. These bids are accepted from cheapest to most expensive, with the final price (awarded to all bidders accepted) being the final and most expensive bid – often a gas generator.
As natural gas prices have increased, the more expensive running gas turbines has become, often overwhelming the downward pressure from renewable generation. Renewables bid into the market at low prices because their power is essentially free, displacing other more expensive competitor’s bids. Without renewables, the prices we pay would most likely be much higher.
Although the reduction of wholesale prices is great news, electricity bills are comprised by 7 main components, of which wholesale prices account for around 30%. Furthermore, movements in the forecast of wholesale electricity prices exert pressure on minimum feed-in tariff rates. This is cited as one of the reasons why Victoria’s minimum feed-in tariff rates have reduced from 10.2c/kWh to 6.7c/kWh. Other states and territories are likely to follow suit.
After the major retailer reprice of July and August, and with a lot happening in the energy industry at the moment, we’ve taken the opportunity to analyse the latest behaviour of the spot market across all regions. As a customer of Members Energy, you make 100% of the revenue when you trade your excess stored energy at a time when prices are higher than your standard feed-in tariff – for truly unlimited trading potential!
In a similar fashion to the last update, we have graphed spot price values broken down by region. The graphs include the fluctuations of the market over 4 months, from end of March to the end of July 2021 (124 days), reflecting the maximum and average values of the spot price for the whole day. Please note the Australian Energy Market Operator (AEMO) updates the spot price every 5 minutes and allocates an average price for every 30-minute slot as described in the aforementioned bidding process, which means there are 1,392 half hour spot prices through the day. The graphs below display the average and max values only.
The spot price in NSW / ACT
The maximum spot value for electricity in New South Wales (and the Australian Capital Territory) averaged 95.96 c/kWh, with peaks of up to $8.23/kWh throughout the period analysed.
Over 95% of days had maximum values above the state’s minimum guarantee of 6c/kWh, making this region the second-most consistent at surpassing and maintaining higher revenue margins for our members – between 1.88 and 15.99 times the min. FiT!
The spot price in QLD
More than 94% of spot prices in Queensland remained above the minimum guarantee of 6c/kWh – with a clear peak of $15/kWh on the 25th of May at 17:00 hrs.
The maximum values in this region averaged $1.24/kWh, the highest potential for our members’ energy trading out of all regions in the NEM. Potential revenue margins in Queensland went between 2.12 and 20.83 times the minimum FiT!
The spot price in SA
The South Australian maximum market values remained above the minimum feed-in of 6c/kWh in more than 94% of days analysed. These maximum values averaged 37.85 c/kWh, with the highest value reaching $7.04/kWh on the 18th of May at 18:30 hrs.
Our members in SA obtained revenue margins between 1.24 and 6.3 times the minimum FiT offered.
The spot price in TAS
The Tasmanian maximum spot values averaged the 18.53c/kWh and remained above the minimum state’s guarantee of 8.47c/kWh for 70% of the period graphed.
Several intermittent peaks have been identified, with the highest value achieved recently hit $2.39/kWh on the 21st of June at 17:30 hrs. Maximum prices averaged 18.28 c/kWh, which meant a revenue margin of up to 2.15 times the minimum FiT offered.
For the days where average prices went under 8.47c/kWh, Members Energy customers in Tasmania received the minimum feed-in tariff guarantee.
The spot price in VIC
For over 84% of the days analysed, the maximum spot price in Victoria remained above the 10.2c/kWh mark. Our customers in Victoria were able to trade their excess energy for up to $7.44/kWh on the 18th of May at 18:30 hrs.
The revenue margin for our Victorian members went as high as 3.9 times the minimum FiT offered!
And for those days where the market was not that favourable, Members Energy ensured our customers in this region received the minimum feed-in tariff guarantee of 10.2c/kWh.
Remind me again, how does the trading of my electricity happen?
Thanks to the Evergen Intelligent Control software installed in your battery, you have access to the wholesale market rates to sell your excess stored energy. The market will go up and down as supply and demand throughout the day change, so there is no limit to the amount of spike events that can happen in one day. Likewise, there is no limit to the amount of energy you can sell – if you have any excess energy stored in your battery to sell during a spike event, you will trade with unlimited upside.