Wholesale markets quarterly - Q4 2020

Segment: 
Category: 
Quarterly report
Release date: 
18 February 2021

Overview

The AER's monitoring, regulation and enforcement roles help deliver affordable and reliable energy for Australian consumers. Our quarterly reports allow us to identify significant trends in the electricity and gas markets, and independently evaluate market developments as they emerge.

Key findings

  • Calendar year annual wholesale electricity and gas prices were at their lowest levels since 2015.
  • Average annual wholesale electricity prices were below $70 per MWh  in all regions and average annual wholesale gas prices were below $6 per GJ in all markets.

Electricity

  • Average Q4 2020 electricity prices, were generally low, ranging from $35 per MWh in South Australia to $71 per MWh in NSW.
  • Mild weather and record rooftop solar generation led to record low demand in Victoria and South Australia.
  • Low demand and high wind generation drove lower prices, particularly in Victoria, South Australia and Tasmania. South Australia had the lowest quarterly price in the NEM since Q1 2012.
  • Q4 2020 also highlighted significant changes in the NEM’s generation fuel mix. Q4 2020 saw record wind and large scale solar generation output assisted by a record 3,700 MW of renewable capacity entering the market in 2020.
  • Q4 2020 saw the lowest black coal generation output across the NEM since 2014, with record low black coal generation output in NSW. The fall in black coal generation was mostly driven by planned generator outages.
  • Record renewable generation and lower levels of demand saw gas generation fall to its lowest Q4 level since 2005.

Gas

  • Average east coast spot market prices were $5.92/GJ this quarter, returning to levels seen in Q1 2020. 
  • Exporters and producers reduced volumes sold in domestic spot markets over Q4 2020 in favour of higher international spot prices.
  • A record 34 LNG export cargoes departed Queensland in December 2020. This was driven by increasing Asian LNG prices throughout Q4 2020 which also placed upward pressure on domestic prices.
  • Lower demand for gas used to generate electricity over Q4 2020 and increased northern production meant that domestic prices did not rise as much as they otherwise might have during the quarter. Into 2021, prices in domestic gas spot markets continue to be moderate, with monthly prices remaining under $7/GJ into February.
  • The east coast gas markets responded to increased northern demand with the strongest flows of gas from south to north since Q4 2017. The Day Ahead Auction of pipeline capacity facilitated significant quantities of those gas flows north.