Spot prices back to gory days of 10 years ago on the last hurrah of carbon

With the carbon tax machinations in Canberra seeming to be at an end today (at least until they start up again over Direct Action) this snapshot from NEM-Watch reminded me of the lowest price depths achieved early in the last decade when the NEM was also awash with surplus capacity – at least in VIC and NSW:

Electricity prices plunging to levels not seen for many years, on the day the Carbon Tax is repealed

Opening up NEM-Review to trend price data since the start of the NEM, we see that average monthly prices were seldom all in the twenties simultaneously (levels seen this afternoon in the snapshot above):

Trended monthly average electricity prices in the Australian NEM

We’ll have to look further, later, to see how quickly carbon is unwound out of all bids, but it seems likely that the residual level speculated about here will quickly disappear (after all, who’d want to attract the ire of Clive?).

However that’s not the only factor.  As the trend of declining demand continues, it’s worth highlighting the overall level of surplus scheduled generation across the NEM – as shown here:

Increasing amounts of surplus generation speak of a very oversupplied market

This chart speaks of a world of pain to come for generators, before supply and demand are brought back into balance.

About the Author

Paul McArdle
One of three founders of Global-Roam back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

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