Lower prices but a similar story for those setting the price

2020 was one for the books with plenty of interesting events happening worldwide and also in the energy markets. For the NEM specifically, it was a time of significant changes in price outcomes compared to the previous years of comparatively higher prices. However, now comes the question of whether NEM prices continue to follow the trend of 2020 or whether the market slowly adjusts to the higher priced environment pre-pandemic?

With this question in mind, we wanted to look at how (if at all) price setting dynamics changed last year. It is of particular interest as prices in the NEM are set by the marginal price – the offer price of the last MW needed to meet demand. Price outcomes in all NEM regions were lower than in 2019 due in part to more variable renewable energy (VRE) entering the supply stack (from 10% to 12%) and spot gas prices dropping significantly to make the marginal cost of gas generation comparatively cheaper year-on-year.

Jake Dunstan

Jake Dunstan

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