Markets move again on Hazelwood closure

03 Nov Markets move again on Hazelwood closure

Workers at Engie’s Hazelwood Power Station were today called to a meeting to be advised of the closure of the plant in March 2017.

Hazelwood has been producing low cost baseload for more than 50 years in Victoria.

The brown coal power station has been producing approximately 20% of Victoria’s energy demand and has helped make Victoria the cheapest state in the national electricity market for wholesale electricity.  This is no longer the case with both Queensland and New South Wales now cheaper in Q217 and Q317.

While the largest increases have been evident for Victoria, there has also been an impact on prices in New South Wales and Queensland. Most of the increases have been contained to 2017 prices with smaller increases in 2018.

There is often immediate market movement following announcements like these followed by a return to usual levels. Uncertainty drives volatility in prices which adds a premium to the forward prices.

The 2017 prices are expected to hit resistance today or tomorrow and then settle down over the next week or two. 2018 and beyond may increase slowly across the next couple of weeks as the market digests the news. As there is more time to adjust positions further out, longer term pricing tends to move more orderly than near-term pricing where there are strict limits on trading.

Engie is expected to make a formal announcement at their 2pm press conference.

Edge Energy Services will continue to monitor the market closely and report on impacts relating to this closure.

If you have any questions please contact your Portfolio Manager by email or on (07) 3232 1115.

Tags: