Whilst pricing has stabilized from the extreme highs of 2022, and largely settled based on the new “normal” for global gas and coal pricing during 2023, 2024 has seen a return to volatility.
This new volatility is predominantly as a result of ongoing closures of coal generation assets and the relative uncertainty of wind and solar generation. All new generation has been Wind and Solar, which is proving to be problematic to supplement base load generation due to it’s inconsistency. We are seeing Solar in particular becoming less tolerated by Networks with the implementation of Solar Feed In tariffs to charge customers exporting power into the grid. Many Retailers are no longer offering any Feed In Tariff for solar export and solar generation is often sending spot pricing into negative price during peak solar generation periods.
Currently there are a number of large generators unavailable for scheduled and unscheduled maintenance which has driven spot pricing to double the price it was 6 weeks ago.
There is an increasing trend to expand storage assets, with Origin Energy recently announcing that they will double the capacity of their Eraring Battery. Expansion of Battery Storage may overcome the concerns surrounding excess export during peak periods of solar and wind generation and potentially bring some stability. The unfortunate reality being with declining coal and gas, and no appetite for Small Modular Nuclear Reactors, storage in batteries or pumped hydro is our only viable solution for the medium-long term, and both of these bring significantly higher costs of generation.
Bundled Electricity Tariffs are reviewed each year, normally aligning with a review of the regulated tariffs which is the maximum rate that can be charged. The most increases from July 2022 were small and did not capture the increases in the market, largely insulating SME and Residential Consumers from the increases in the hope the market volatility would be short-lived. This was unrealistic and tariffs inevitably increased materially from 1 July 2023 with increases up to 30%, increases from 1 July 2024 were up to 10% and likely to remain at 5-50% increases annually for the foreseeable future.