A view of captured prices by technology in New South Wales

This Chart of the week examines the historical captured prices of selected technologies within NSW for the last 10 years.

Figure 1 shows the historical rolling monthly average of captured prices of various technologies within New South Wales against the monthly generation of variable renewable resources including small scale rooftop.

Prior to 2016, in the era of overcapacity of thermal generators, there was a marginal difference between captured prices of the baseload coal-fired generators and gas and hydropeaking plant, with the exception of high price events which result in extended blocks of higher prices in the rolling averages.

From the end of 2015, prices across the NEM began to increase as a result of the commencement of LNG exports in Queensland, exposing the previously domestic gas supply to international prices. Price increases were further exacerbated by the withdrawal of substantial amounts of thermal capacity from Northern PS in 2016, and Hazelwood PS in March 2017.

In 2017, solar farms in NSW returned a monthly average of 2.4 $/MWh higher prices than coal generators. A large influx of rooftop and large scale solar subsequently resulted in the inevitable reduction in captured prices.

Interestingly, NSW solar farms have thus far been able to maintain on average a higher captured price ($57.8/MWh in year to December 2020) than NSW wind farms ($51.7/MWh) despite their competition with rooftop solar and very high correlation of generation. The ability for more southern located single axis tracking farms to capitalise on long daylight hours on hot summers days enables them to capture at least part of the evening summer peak prices, with less competition from the static small scale rooftop providers. Solar farms are also less affected than wind farms by the derating impact of heat, which can limit their ability to generate at full output during heatwaves.

On the other side of the scale, the opportunities for storage solutions are growing with peaking gas and hydro plant more consistently commanding a higher captured price than coal. These peaking plant are able to avoid periods of high correlation of variable renewable resources in addition to capturing high price events.

It is also expected that demand-side management and the uptake of smart charging associated with EV’s will assist in supporting variable renewable energy captured prices.

For more insights and our view on the decarbonisation pricing through the energy transition, our ‘BPC price curves’ service provides granular price forecast for the future energy mix and captured prices.