FACTORS INFLUENCING MARKET PRICES
Since the withdrawal of the Hazelwood Power Station in Victoria in 2017, pricing has been extremely volatile and new contracts are predominantly delivering a decrease in energy costs to existing contracts from 2020 to 2022. Network tariffs however have largely stabilized with the significant increases in recent years no longer prevailing, there remains however a continuing trend continuing towards increases in Demand and Capacity charges and kVa based tariffs, this is increasing the incentive for customers to introduce energy management solutions reduce demand which reduces the requirement for investment in new infrastructure.
Spot market pricing has increased recently, with baseload generation outages in June for NSW, QLD and VIC, importantly, the Loy Yang A2 generator in VIC will be out of production until December 19, this may extend into 2020. Hydro generation is at risk with lower storage levels at Snowy and HydroTAS.
Stabilisation of global pricing for Coal and Natural Gas had minimized the impact of generation withdrawals which would have otherwise been more significant, however increases in pricing for Coal and Gas over the past 6-12 months has impacted price reductions with Gas pricing increasing over 50% during 2018. Victorian electricity pricing will continue to degrade as Gas pricing increases due to the high dependence on gas-fired generation.
ENERGY EFFICIENCY AND DEMAND REDUCTION
With an increased focus on demand by Network Providers, there are a range of incentives and opportunities in improving energy efficiency and reducing demand. In areas where networks are constrained, significant financial incentives exist, and even where networks are not constrained, returns and reductions in operating costs can be compelling.
The transition from kW to kVa demand tariffs has increased the benefits of implementing energy efficiency solutions such as Power Factor Correction in these locations.
NES is consistently seeing significant opportunities in the implementation of Solar PV, Lighting Retrofits, Air-Conditioning, Refrigeration and HVAC Optimization, Demand Management, Power Factor Correction and Voltage Optimisation. Energy saving solutions are becoming popular, often with payback periods well under 1 year and for many lighting projects, cost neutral after rebates. Recent Refrigeration and HVAC Optimisation projects have seen reductions of up to 40% on those loads with strategic building energy management achieving similar reductions. Contact our energy saving contractors.
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