1. The wholesale energy markets have been through a significant crisis over the last 18 months:
• Wholesale electricity and gas prices increased by over 300% between Mar and Jun 2022
• This was largely driven by significant increase in global coal and gas prices
• This triggered market intervention by the government in a price cap on coal and gas
Wholesale prices have moderated significantly and stabilised:
• Prices have since significantly moderated, and now have stabilised at levels around 2018
• These levels are still nearly double the very low prices of the mid-late 2020s
2. Aust Electricity Price Comparison to global coal and gas prices
Australian electricity prices are largely influenced by global coal and gas prices:
• The below graph compares a price index of the Australian Wholesale Electricity prices with global prices for coal and gas from 2018 to 2023
• It is clear that there is a strong correlation between these global commodities and wholesale electricity prices in Australia
• There is some evidence that coal and gas price indexes maybe a slight leading indicator
• Recently global coal and gas prices have stabilised while electricity prices are continuing to edge slightly lower
• This may indicate a good time to recontract for any upcoming renewals
3. Retiring of coal fired fleet
The ageing coal fired generation fleet is being brought forward:
• Expected closure dates for the largest coal fired plants are being brought forward
• It is forecast that coal capacity will reduce by 50% to less than 10GW by around 2030
• Rooftop solar installed capacity will likely exceed coal fired capacity as early as 2025
• It is clear that coal fired generation is on its way out in Australia
4. The rise and rise of solar
Rooftop solar continues to be installed in significant volumes
• The Australian market installs about 2 GW of rooftop solar annually
• Rooftop solar is now installed across approximately 2.8 million roofs in Australia
• This amounts to over 18 GWs of solar, similar to the amount of total coal plant in the NEM
• The UNSW estimate Australia has the potential for 179 GW of rooftop solar, which is sufficient to supply all our current electricity usage.
Cumulative amount of rooftop solar installed.
Source: State of the Energy Market 2023 Report
