Knowing your NEM: The jaw is tightened when wind and sun are getting ready to take over carbon and gas
4 mins read

Knowing your NEM: The jaw is tightened when wind and sun are getting ready to take over carbon and gas

The main graph above shows an 180 -day sliding average of thermal production (COPD + Gas) and variable renewable energy and water production.

The moving average delay what is happening but presents a better, longer term. I used 180 days because it shows the seasonal emphasis and you can see how the thermal proportion is increasing in winter and the renewable proportion is increasing in the spring. Right now, the renewable proportion is around its max for this summer season.

Figure 1. Thermal V -renewable energy sources. Data: NEM review

The figure above shows the low wind situation during the winter of 2024, but the trend is quite clear. More detailed analysis is required, but given that the total growth in “underlying” electricity needs remains modest, every MWH that VRE gains is more less 1 MWh that the thermal generation loses.

So, in summary, 11 terawatt hours (TWh) will be more of our way to see the lines cross.

In a figure that will not surprise, the heavy lift is made in the growth of VRE production of the ceiling. The aforementioned wind capacity has increased by about 2 GW compared to last year but has not completely increased.

In a capacity factor to say, 35% produces 2 GW of about 3 TWh and the roof sun an incremental 1.5 TWh each year.

Figure 2. VRE -Data: NEM -Review

Even a more normal winter helps this subsequent average.

When looking at the shares during the past week, which is much more affected by short -term weather, the VRE share was 41% and renewable energy sources share 45%. The pleasant is the growth in the wind.

Figure 2. VRE -Data: NEM -Review

But spot prices trends don’t

To a greater extent, what I think I see are spot prices that are most low, with very high temporary nails. South Australia is a relatively small market and depending on your perspective, the price is vulnerable to relatively small changes in conditions and/or manipulated.

Figure 4. Flat prices. Data: NEM review

These are flat prices, if anything, that the mainstream media is talking about, but it is encouraging to see that wind and sun prices have held up during this period with generally abundant supply.

Figure 5. Fuel -weighted prices. Data: NEM review

In the following eight -day average chart is what arises a price cut that pushed prices short over $ 14,000/MWh is enough to move the average price up to $ 74/MWh, although most prices in South Australia are far below it .

Figure 6. Sth Aust. Time of the day. Data: NEM review

This nail happened, I think yesterday and the diagram shows reduced imports, foreseen because the gas supply had increased before the interference.

Figure 7. SA -Time of the day. Data: NEM review

This nail did not occur in Victoria (but it is likely to start happening when Yallourn closes or if a Lya unit breaks) and the average price is much lower.

The figure below shows the 8 -day picture for Victoria but if I just looked at yesterday I would have seen hydro, gas and batteries at much higher outputs under the nail. Batteries in both SA and Vic seems to have caught the price spike but as seen in the table above right now, the best place is on average to have a battery QLD.

Figure 8. Victoria Time of the Day. Data: NEM review

Conclusion – More batteries will reduce price spikes

More wind helps to lower the average evening prices, but only lots of batteries, or much more gas can handle volatility.

There must be enough batteries so that there is an excess delivery at the time of these price nails and then they invite the price a bit. Despite GWS of batteries under construction, there may still be potential for price nails in the evenings in the evenings yet.

For the approximately two GW wind rushing up NEM review data shows that Golden Plains has now hit maximum production of 160 MW and Clark Creek has hit 60 MW.

Figure 8. 2 GW wind frames. Source: NEM Review

David Leitch is a regular contributor to Renew the economy and co-host of the weekly Energy Insiders podcast. He is the headmaster of ITK, specializing in analysis of electricity, gas and decoration deducted from 33 years of experience in stock brokerage research and analysis for UBS, JPMorgan and predecessor.