Let’s talk Energy Markets

 

In the past 2 years, the market has dropped from highs of over $75/MWh in August 2019 then following the events outlined on the chart below the market price dropped to historic lows of around $36/MWh. Following some volatility at the start of 2021 driven by a hot summer, the market firmed and increased further because of the catastrophic failure of Callide C4 and the tripping of many other power stations.

The chart below shows that the underlying spot price (light blue line) has continued to spike and trend up resulting in increases in the contract prices. Another interesting aspect of price curves is how market announcements such as the cost of coal and gas can impact the curve. In months, the curve softened but spiked due to conflicts in Ukraine causing coal and gas, a key input to thermal generation, to increase in price.

The spot price of these commodities is not directly linked to the fuel price used by generators in the next quarter, so the market has now softened.

Future years are also becoming cheaper year on year as renewable energy takes a larger share of the market and renewable energy is expected to continue to fall in price.

Having recently undertaken a few requests for proposals (RFP) for our clients, we are aware there is good value for companies willing to take up longer term renewable PPAs. More and more projects are becoming available post 2023/24.

Undertaking a renewable PPA will go towards meeting many companies’ sustainability targets through the procurement of renewable energy and environmental certificates.

Below are the contact details for Alex. He would be happy to discuss your company’s sustainability targets and how we can help the business reach them.

Alex Driscoll

Senior Manager Markets, Trading & Advisory

M: 0437 966 409

P: (07) 3905 9226

T: 1800 334 336

E: alex.driscoll@edge2020.com.au

Formula Sustainable

 

Formula sustainable

With the new F1 season on the weekend eve of re-starting, I wanted to look at the evolving platform this immense sport has and the new role it is taking in being vocal on many issues.

It is now a common sight at the start of the race to see Lewis Hamilton taking the knee and many wearing the #WeRaceAsOne messages on their front. Although the Silver Arrows are returning to Mercedes this year the Black coveralls remain, a sign that their quest for equality continues. This is in addition to the Mission 44 – Hamilton Commission promoting diversity and inclusion in motorsport and the Mercedes “ignite” program promoting better representation of diverse students studying STEM and engineering, as well as wider parts of the industry.

They are not the only vocal voice on the pit wall however, Sebastian Vettel has taken several, some would say controversial, I personally call them impassioned, stances this year. This varied from wearing rainbow colours ahead of the Hungarian Grand Prix to stand against the anti-LGBTQ+ legislation, to what was certainly the boldest stance following his organisation of a women’s only kart race ahead of the inaugural Saudi Arabia Grand Prix.

But as a wider sport, they are acknowledging the impact such a global sport has on climate. To try and be a global leader on this issue, in 2019, the F1 governing body announced an ambitious sustainability plan. Their aim is to cover the F1 cars on track activities, in addition to the rest of the operations’ carbon footprint, to achieve a net zero emissions target by 2030.

Further to this, they have guaranteed that by 2025 all events must be sustainable. This isn’t just in offsets but includes the use of only sustainable materials at events thus removing tonnes of single use plastics.

They are also looking to be able to improve the travel facilities to ensure fans can reach the circuits in more sustainable fashions. No one is suggesting we adopt the Zandvoort approach where nearly all cars were banned from journeying to the track and surrounding towns, and almost equal numbers of fans chose to bicycle, from the designated park and ride facilities where bikes were provided, as those who chose to take the train. Yet what it does show is with real co-operation there are alternatives to the status quo.

The cars themselves have always been at the forefront of technological changes with many facets of the car making it into your car on your drive. These range from the sat nav to energy recovery systems and aerodynamic innovations. So why should such an innovative industry not lead from the front again?

This year’s car has been adapted to take 10% ethanol into the fuel mix, yet its most ambitious target is yet to come. With the aim that by 2025 the new generation of the power unit will be there to take sustainable ‘drop-in’ fuel it is hoped this will be the same fuel which could be used in cars we drive and fill up at the servo without any modification.

This will be crucial with waitlists for electric cars going through the roof and the number of combustion cars on the road only increasing, if they can be run cost effectively and sustainably and deliver less than 65% emissions than current cars the benefits could be huge.

This would mean once again F1 has led the way to ensure not only has the sport become sustainable, but they have advanced the offerings so much that we can benefit from their excellence.

In the meantime, let’s see what this year’s raft of changes will bring as it is almost time to say “lights out and away we go”.