May 2023 – Market Update

Record-breaking weather drove demand in the spot market in May, while a delay in the return of additional generation to the market is impacting the forward curve.

Spot market

In the spot market, we saw significant price increases across Queensland (up $54.97 to $164.90), New South Wales (up $83.15 to $193.99) and Victoria (up $43.53 to $127.15). This was largely due to a cold weather snap that caused an increase in demand for heating.

More than 100 weather stations throughout Australia registered their coldest May minimum temperatures on record. Persistent high pressure systems over Australia led to records being broken across all states, with frost extending all the way up to tropical North Queensland.

But this unusually cold May doesn’t mean we’re in for a freezing winter.

With El Niño conditions emerging, winter temperatures are expected to be above average. That means we’ll be able to give our heaters a break.

But it also means we’re in for a hot summer, which could lead to spikes in demand for electricity driven by air conditioning use.

Contract market

In the forward market, we saw the curve jump in price as the expected return of additional generation to the market was delayed.

Two units that were expected to return at partial capacity this year will now remain offline until 2024.

While the energy system is still forecast to maintain adequate supply, this delay has contributed to price increases from Cal 24 onwards.

Cal 24 prices were up $15.60 to $123.25 in Queensland, up $9.70 to $141.60 in New South Wales, and up $3.15 to $92.70 in Victoria. Looking further ahead, Cal 25 prices were up $7.80 to $97.40 in Queensland, up $4 to $126 in New South Wales and up $7.35 to $82.80 in Victoria.

Environmental market 

In the environmental market, significant volumes of retail buying interest from Cal 23 onwards has placed pressure on the curve for Large-Scale Generation Certificates (LGCs).

At the same time as demand has increased, the forecast supply of LGCs for Cal 23 has been downgraded by 0.9 million certificates, leading to an increase in price – up $5.65 to $58.25.


Meanwhile, the price of Australian Carbon Credit Units (ACCUs) was down slightly in May (down $2.85 to $34.75), while Small Scale Technology Certificates (STCs) remained at the fixed price of $40.

And that’s it for May… wishing you all the best for June from the team at Stanwell Energy!