First day under the carbon tax – how have spot prices changed?

It’s Sunday 1st July 2012, so it’s timely to see how spot prices have changed with the advent of carbon pricing.

Using NEM-Watch v8, we have included before and after screenshots below to provide some contrast in a market context that is otherwise very similar between Saturday 30th June 2012 (pre-tax) and Sunday 1st July (with the tax):

Saturday 30 June at 15:25 dispatch interval	Sunday 1 July at 15:00 dispatch interval
On Saturday afternoon, we see that the NEM-wide demand is 21,767MW and prices for all regions are in the range of $31.25/MWh to $36.71/MWh	On Sunday afternoon, we see that the NEM-wide demand is 22,087MW (a negligible difference of only 320MW) and that prices have risen to be in the the range of $51.07/MWh to $64.69/MWh

The colour-coding of the price boxes in NEM-Watch make it readily apparent how the prices have changed (click on the images for a larger view).

It is overly simplistic to compare single dispatch intervals (pre- and post-) to form any definitive understanding for how prices have changed under the carbon tax regime (and it is possible that a number of weeks or months will need to pass before generators settle on trading strategies adjusted to the new environment) but the following table provides some early indications:

With respect to this crude comparison, it is not warranted to conclude any more than that prices have risen (across the NEM) by about as much as was intended in the design of the scheme.  A time-series of prices (also from NEM-Watch) is shown in the following image to highlight the transition at midnight:

Like many others, we’ll continue to watch with interest (with NEM-Watch, ez2viewAustralia, NEM-Review and other tools) to see how the market continues to evolve to address this new reality.