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The current state of the energy market

Tablet and solar panels
12 September 2022

The National Electricity Market (NEM) is a wholesale electricity market which comprises of a grid interconnecting five regions: Queensland, New South Wales including Australian Capital Territory, Victoria, Tasmania and South Australia. The NEM is currently going through an energy crisis due to combination of different reasons, forcing the Australian Energy Market Operator (AEMO) who is responsible for operating electricity markets to suspend spot market in all regions to ensure for a secure and reliable supply of electricity to consumers.

The crisis is driven by a myriad of factors affecting supply and demand including ageing coal power plants undergoing planned and forced outages, skyrocketing thermal coal and gas prices in the global market due to the ongoing international crisis, reduction in domestic coal output supplying the market, and early winter increasing gas demand. AEMO advises that the wholesale electricity prices have increased by 141 % in the first quarter of 2022, compared to the same period last year.

As the wholesale cost accounts for 30-40% of the total electricity cost, large business customers will see significant increases in their energy costs now and into the future. Experts believe that the market will likely experience high wholesale costs for the next two years.

Now is the prime time to review your energy costs and devise a plan moving forward to shield your business from a volatile market.

The team at HFM consulting continue to focus on identifying opportunities to influence pass-through charges across building sites. This includes the following solutions:

  • Reviewing current energy contracts and assessment of potential impacts
  • Solar PV and battery opportunities to reduce high energy costs and take positive steps towards a carbon neutral future
  • Utility performance management
  • Peak demand management to reduce network charges
  • Power factor correction equipment

The benefits achieved via these possible solutions will ultimately affect the total cost of energy by reducing both the amount of electricity consumed but also the calculated pass-through charges based on peak site demand.

If you’d like to find out more about these solutions, please contact info@hfmassets.com.au.

Author: Rojan Pandey, Lead Consultant, Energy & Water, HFM