Market update – December 2021

By Stanwell’s Trading Manager, Mike Cave.

Watch the full update here

 Spot market

Our tropical Australian summer has well and truly arrived and that means it’s time to turn on the air con. Queensland experienced wet and overcast conditions in December, which meant less solar generation during the day. And as most of us are spending time indoors with that AC on, we saw an increase of more than $32 per hour in the spot market in Queensland, with a final December flat price of $128.61.

New South Wales and Victoria’s spot prices rose and fell respectively but were otherwise similar to November’s spot prices. There were also a number of generation outages in the NEM which kept prices high.

Contract market

In the contracts market, December has seen significant volatility, especially in QLD and NSW. Sellers seem to be concerned about fuel shortages and costs leading to reduced availability of contracts.

Adding to higher contract prices there was a trip of the Swanbank E Power Station in QLD which has now been taken offline for Q122. Off the back of this, Q122 Queensland contract shot from $116 to almost $125 in a day, dragging the NSW contract with it.

The Victorian contract market has seen relatively low trading volumes and only a small movement with a high availability of generation.

The back end of the contracts market has also followed the upward trend across all Nodes.

Environmental market

The environmental markets were also interesting in December. In the lead-up to the 2021 Surrender deadline for the Renewable Energy Target, LGC buying has intensified with Spot LGCs trading up $1.55 per LGC.

Spot STCs stayed steady across the month, with the market closing at $39.00 with creation levels returning to over 1 million certificates per week in mid December.

There was also strong buying demand for Australian Carbon Credit Units across December which saw the market close $8.00 higher. Increased interest from corporate customers in the ACCU market saw demand exceed supply.

And that’s it, Happy New year from everyone at Stanwell Energy.