Average energy prices decreased by 46% in Q1 2020 compared to 2019, but peaks are up

Research from Cornwall Insight Australia shows that on average energy prices declined significantly in Q120 compared to 2019 – averaging a decrease of ~46% across the NEM.

In fact, in Q120 New South Wales (NSW) was the only region where prices were higher (on average) than Q119 (only Victoria (VIC) had higher prices between 2.30 pm and 3.30 pm – excluding two price periods where prices in South Australia (SA) were greater than $4,000/MWh which pushed the averages for a single 30min period up higher than 2019 for 2020).

These do not tell the full story, and further research from Cornwall Insight Australia shows that while prices are down 25%-50% across most of the day, there is still significant value (50%-350% increase on 2018 prices) in the evening peaks between 6 pm – 8 pm depending on the state.

Energy prices in New South Wales

Ben Cerini, Principal Consultant at Cornwall Insight, said:

“While drops in the energy price are good for consumers, it requires investors to be more nuanced when evaluating potential technologies and the future value of projects.

“NSW has seen the largest peak price increase. With a significant capacity set to retire in NSW in the next few years, this price trend may persist in the short to medium term.

“Those technologies and strategies that can be mobilised to provide services during these peak pricing periods will become the most successful and sustainable investments. Storage in NSW and VIC seem to be the most attractive. However, NSW is the only state where there have been increases in peak prices in the past two years.

“If we use prices as a barometer for system needs, then flexible peaking assets like storage will be needed in the short to medium term to meet system needs. The need is likely to be even more prevalent as more renewable energy is connected to the grid.”