Wholesale Energy Market Update: March 2024

Wholesale Energy Market Update: March 2024


We begin this Wholesale Market Review by sharing some highlights from the Bureau of Meteorology’s (BOM) Seasonal Summary for this summer, which was a rather atypical El Nino summer.



This was Australia’s third-warmest summer on record, characterised by persistent and widespread heat.

Summer mean minimum temperatures were above average for nearly all of Australia and were the highest on record for South-Eastern Queensland and North-Eastern New South Wales. In fact, Brisbane minimum temperatures had failed to drop below 20 degrees Celsius for 2024 well into March.

Furthermore, severe thunderstorm activity brought extensive flooding to parts of the eastern and south-eastern mainland, with rainfall well above average in the south-east areas of the country.

So how did these weather impacts play out in the Power markets?



Starting with the last quarter of 2023, what we are looking at here is the ASX end-of-day contract prices for Q4 ‘23 baseload swap, going back to the start of 2023 for Queensland and New South Wales on the left, and Victoria and South Australia on the right.

Contract prices were strong in the first half of 2023, with price rises driven by the Liddell closure, extended plant outages, delays in Callide C return-to-service, and expectations of a hot El Nino summer driving bullish sentiment.

Prices for contracts softened in the back half of the year, thanks to weaker spot outcomes. The dots on each chart represent the rolling average spot price for the quarter. We can see the weak start to Q4 ‘23, with very low spot prices in October driving drops in the contract prices, particularly in Queensland and New South Wales. The northern states recovered somewhat, due to a stronger November and December, where we saw some price volatility.

Looking at the same data for Q1 ‘24, we see some similar contract price dynamics across the year. High contract prices through the year, which trended downwards through Q4 ‘23, off the back of weaker than expected spot prices. Entering Q1 ‘24, lower spot prices continued, but as we moved out of the holiday period, persistent strong demand saw prices push higher in the northern states. Queensland, through consistent higher demand culminating in a record-breaking demand day, saw spot prices surge, and the regular threat of volatility pushed contract prices higher as well. New South Wales was more tempered, though late heat and volatility saw a jump in prices.

It was a different story down south though. Weak demand with somewhat mild temperatures saw Victorian and South Australian spot prices remain quite low through the first half of Q1 ‘24, well below expectations. That came to a sudden end on 13 February when a severe thunderstorm rolled though Victoria taking down transmission line towers, resulting in the loss of the entire Loy Yang A power station and significant load, forcing AEMO intervention to maintain system security. This saw a sustained period of spot prices at the market price cap of $16,600/MWh. Uncertainty around the event saw contract prices surge from $30 to over $80/MWh. With the system returned to normal, the market corrected the next day, but the Market Price Cap event had added over $20 to the contract price. A timely reminder of volatility risk in the power market.


Diving a little deeper into the demand dynamics we’ve mentioned so far, the charts here show the average Working Day Demand profiles for Queensland, New South Wales and Victoria – comparing Q4 ’23 to the previous year.

Queensland saw increases across all parts of the day, while in New South Wales increases were mainly across the evening peak periods. On the whole, Victoria saw demand down year on year, thanks to increased rooftop solar PV bring down middle of the day demand. This in turn resulted in significant periods of negative spot prices, particularly through October.

These trends continued into Q1 ‘24.



Queensland saw quite strong demand increases with warm overnight temperatures driving air conditioner usage; evening peak demand was averaging around 9000 MW, the absolute record level not that long ago, and the record demand level was smashed by over 1000 MW on the 22nd of January as Queensland maximum demand broke through the 11000 MW level.

Victoria though saw demand on average down year-on-year – the impact of increased rooftop PV output seeing middle of the day demand fall lower and helping contribute to the low spot price outcomes.

The Generation side too played its part, particularly in the lower than expected Q4 ‘23 spot price outcomes.


Theses charts show the NEM-wide average output, by month, of grid-scale solar on the left and wind on the right, comparing summer ‘23-‘24, to summer ‘22-‘23.

Solar has clearly been growing, with October showing a particularly high year-on-year increase. Wind output was a bit more consistent year-on-year, apart from a rather high October, which was a further contributing factor to the low spot price outcomes that month.


Moving to the more general trend in forward contract prices, the charts here show historic ASX financial year contract end-of-day prices, for both baseload swaps and $300 Caps, going back to July 2018.

In the past six months, forward contract prices have been trending down, yet prices have remained at historically elevated levels, particularly in Queensland and New South Wales. The $300 Cap contract prices, an indicator of expected volatility, are strong, highlighting that volatility of spot prices – due to a decreasing proportion of dispatchable generation across the NEM – is expected by the market to be a major component of price outcomes.


In this edition of the Wholesale Gas Update, we’ll compare average monthly trends across recent years, as compared to those of the past seven years, for supply, demand, and storage, and take a look at how these market fundamentals have contributed to softer and less volatile spot price outcomes.

In the following chart series, the previous seven-year range of monthly outcomes is represented by the yellow shaded area, with the last three years represented as red, blue and green lines respectively.


Domestic gas demand, excluding gas powered generation consumption, has set seven-year historical record lows every month since June 2022, with January and February average daily demand nearly 200TJ/d below the same period in 2022. By comparison, 2022 set the record for the highest monthly demand across nearly every month. Much of this demand story can be explained by the weather, with 2022 unusually cold in the southern states and 2023 unusually warm.

Average daily demand for gas consumed in power generation also set new lows for most of 2023 and in early 2024, with the forecast El Nino failing to materialise in high power or gas price outcomes thanks to well-supplied power and gas markets.  


Mild domestic demand was met with record QLD production, which set new records every month since April 2023 to date, with the exception of November 2023, when an LNG vessel at the APLNG facility was unable to depart on schedule due to engine failure, which required a reduction in production and associated upstream supply to balance the market.

QLD production, which includes the vast coal seam gas fields, produced on average 4,300TJ/d in January and February 2024, setting fresh records. This includes strong performance from existing production and a continual ramp in production from the Arrow project.

Due to low domestic demand, and record high QLD production, Victorian producers curtailed production. This generally occurs by contract holders exercising nomination flexibility and taking less gas, or producers electing to store uncontracted gas for later, rather than producing now at current market prices. In January and February, southern production averaged less than 600TJ/d, stepping down across each of the past two years and setting new seasonal lows.

Diving deeper into the economic curtailment in southern supply, both Longford and Otway swing facilities produced less gas than they were able to since October last year. These periods are reflected on these charts as the white space between the historic Short-Term Capacity Outlook and actual production. Looking forward, the Medium-Term Capacity Outlook across both facilities is further reduced looking forward, with periods of planned maintenance in the next couple of months in the lead up to winter.


Storage levels have trended at a seven-year high since April last year. After a mild winter where only 5PJ was withdrawn from storage, current inventory is around 22PJ or above 90%, with a couple of months before the winter drawdown season commencing in May. Some gas was withdrawn from storage in February this year, supplementing the market after an extension to maintenance at Longford.


Summarising the last 6-12 months of market fundamentals, we’ve seen record low domestic demand coupled with record high QLD production, leading to record high storage inventory and a well-supplied market. The LNG export facilities and southern producers each played a balancing role in the market, contributing to mild spot prices which were range bound between about $10 and $12/GJ, with relatively low volatility when compared to 2022.

The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this video “Shell Energy” is sometimes used for convenience where references are made to Shell Energy Retail Pty Ltd and its related companies in general. Likewise, the words “we”, “us” and “our” are also used to refer to Shell Energy Retail Pty Ltd and its related companies in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities.

Shell Energy Retail Pty Ltd makes no representation and gives no assurance, guarantee or warranty as to the accuracy of information provided. All forward looking statements are based on publicly available information and are estimates only and should not be relied upon without seeking further advice. To the maximum extent permitted by law, none of Shell Energy Retail Pty Ltd, its related companies, directors, employees, or agents will be liable for any loss arising from the use of information presented in this video or in connection with it.

ASX Data is subject to the terms and conditions displayed on our website at https://shellenergy.com.au/energy-insights/asx-terms-conditions/

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