Generic Hero BannerGeneric Hero Banner
Latest market news

Australia gas plants face price, renewable headwinds

  • Market: Electricity, Natural gas
  • 02/02/21

The decline in gas-fired power generation to a 15-year low in eastern Australia's national electricity market (NEM) in October-December may reflect the transition of country's largest source of greenhouse gas (GHG) emissions to a lower carbon intensive sector. But it was not what the Australian government had in mind when it unveiled its gas-led recovery plans last year.

Canberra's gas-led economic plan pledged funding for a new 1,000MW gas-fired power station in New South Wales, as well as underwriting studies for new gas pipelines and developing non-producing gas basins in Queensland and the Northern Territory. It has started funding some of the latter, but the latest data on gas-fired power challenge its premise for a new gas-fired plant.

Gas accounted for 6.4pc of power generation in the NEM, which represents around 85pc of national electricity generation, in October-December. This was down from 8.5pc in the same period in 2019 and 11pc in 2017. For 2020, gas accounted for the lowest share of the NEM since 2008.

A significant factor behind the declining market share of the fuel for power generation in the NEM is the addition of solar photovoltaic (PV) and wind power, which increased the share of renewables in the NEM to 26.4pc in 2020 from 22.6pc in 2019, 20.3pc in 2018 and 15.6pc in 2017.

The decline in the share of gas was also forecast by the Australian Energy Market Operator (Aemo), the body that operates Australia's power and gas markets. Aemo estimated in its annual gas demand forecast report in 2018 that gas demand from power plants in eastern Australia was likely to fall by two thirds by 2025, mostly because of a stronger-than-expected uptake of renewable energy. Using the calendar 2017 average daily use of 539TJ/d (14.4mn m³) for gas-fired power plants in the NEM, last year's fall to 380TJ/d represented a 29pc drop or almost half of the magnitude of Aemo forecast in 2018 with another five years remaining on its forecast timeline.

Fuel volatility

But neither power nor gas markets move in a linear pattern. The gas share of power generation in the NEM dropped sharply in 2018 to 395TJ/d from 2017 before it rebounded to 457TJ/d in 2019 partly driven by the outage of coal-fired plants.

Other factors for the decline in gas' share of generation fuels include prices, especially the sharp rise in LNG prices. This increased the flow of gas from eastern Australian producing fields to the three export plants located on Curtis island in Gladstone, Queensland, as gas producers sought higher prices in the international market. The three LNG plants shipped record volumes of LNG in December.

Spot LNG prices in northeast Asia rose sharply during October-December to the highest average for a quarter since the Covid-19 pandemic hit global energy markets in January-March 2020, as spot LNG values soared to record highs last month. The ANEA, the Argus assessment for spot deliveries into northeast Asia, hit a high of $39.70/mn Btu on 14 January before falling back to $7.15/mn Btu on 29 January.

The recent price movement reflects a sharp fall and a signal that global LNG markets are moving back into balance. This may see less gas chasing higher prices in the export market, with the spread between LNG spot prices and the Argus Wallumbilla gas price in Queensland narrowing. The Argus Wallumbilla gas price in Queensland was assessed on 29 January at $5.65/mn Btu.

Higher LNG prices did not push up domestic gas prices by that much, but the decline in electricity prices from more renewables reduced margins for gas-fired plants to such a point that it was uneconomic for some to burn gas for power production, according to Aemo's quarterly energy dynamics report released last week.

Renewables expansion

Prices may have eased and made gas-fired plant more competitive but the challenge from renewables remains. with the Australian government's Clean Energy Regulator last month estimating a further 3,400MW of wind and solar PV sanctioned to be built and another 3,200MW in advanced stages of planning. The role of gas in the power markets is largely as a supplier of peaking power to back-up renewables, when the sun stops shining and the wind stops blowing, but so far more renewables has not resulted in more gas in the power markets.

The higher share of renewables has lowered GHG emissions in the electricity sector, which accounted for around one third of national emissions. Aemo said last year that the volume of GHG emissions in the NEM during October-December was the lowest for a quarterly period since the NEM started in December 1998.

The fall in emissions means that electricity is the only sector that is making meaningful reductions in GHG, helping to give some credence to government efforts to reduce the impact of climate change. Prime minister Scott Morrison hinted this week that Australia may adopt a net-zero emissions target for 2050, putting it in line with the largest buyers of its thermal coal and LNG exports, Japan and South Korea, while China has a 2060 target. But Morrison has indicated that he continues to favour a gas-led recovery.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
10/03/25

Ontario adds fee for electricity exports to US: Update

Ontario adds fee for electricity exports to US: Update

Updates with comments from US utilities Calgary, 10 March (Argus) — Ontario is imposing a 25pc tariff on electricity exports to the US starting today, carrying through on its threatened retaliation for a trade war started by US president Donald Trump. "We will apply maximum pressure to maximize our leverage, that's why today we're moving forward with a 25pc surcharge on electricity exports for the 1.5mn American homes and business that Ontario powers," Ontario premier Doug Ford said today in Toronto. Ontario was the largest exporter of electricity to the US in 2023, sending 15.2 TWh to New York, Michigan and Minnesota. The neighbouring province of Quebec, which exported 13.4 TWh the same year to New York and New England, has said it is also considering its options amid the trade war. Ford said he feels "terrible" because average consumers will pay when it is really Trump who is responsible. The surcharge will cost the US up to $400,000/d, amounting to an increase of $100 for consumers each month, according to Ford. "I will not hesitate to increase this charge," said Ford. "If necessary, if the United States escalates, I will not hesitate to shut the electricity off completely." Trump on 4 March imposed a 10pc tax on Canadian energy imports, a 25pc tariff on non-energy imports from Canada and a 25pc tariff on all imports from Mexico. But executive orders that he signed on 6 March exempted North American trade covered by the US-Mexico-Canada (USMCA) free trade agreement from new tariffs after 12:01am eastern time on 7 March. Trump has said he is delaying the tariffs on Canada and Mexico until 2 April, but his executive orders make no mention of that restart date. Minnesota Power, a subsidiary of Allete, imports "a small portion" of its electricity from Ontario but expects the impact to be "negligible", the utility said. Minnesota Power receives 11pc of its of its energy supply from Manitoba Hydro, but Manitoba has not followed Ontario's lead and imposed a surcharge. Michigan's largest utility, Consumers Energy — which serves 6.8mn of the state's 10mn residents — does not purchase power from Ontario. Xcel Energy, which serves customers in Minnesota and Michigan, also said it did not buy power from Ontario. By Brett Holmes and Anna Harmon Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more
News

France's energy plan to allow new fossil-fired plants


10/03/25
News
10/03/25

France's energy plan to allow new fossil-fired plants

London, 10 March (Argus) — A revised version of France's 10-year energy plan, released for final public consultation, cuts a pledge to no longer build any more fossil fuel-fired power plants, while the government is pushing a bill that allows coal-fired plants to be converted to gas firing rather than shut down. The PPE3 plan, which sets out a roadmap for how France will change its energy system out to 2035 in order to comply with the country's goals to reduce greenhouse gas emissions, is now in the last stage of public consultation, several years after it was due to be finalised. The latest version maintains a pledge to phase out coal, with France's last two remaining coal-fired power plants set to close by 2027. But the pledge included in the previous version to "not build new electricity generation sites based on fossil energy" has been removed. And a pledge to "launch studies or pilot projects" to convert existing or build greenfield thermal plants using 100pc decarbonised energy has been watered down. It now promises simply to "help" operators of such plants launch studies or projects, and on fuels that are "less emitting" rather than completely decarbonised. A bill is currently passing through the French parliament that allows the country's two remaining coal-fired plants to be converted to gas operation. Gazelenergie, operator of one of the plants, hailed the bill when it was announced last month. It has the backing of the government, as well as of parliamentarians from across the political spectrum in the Moselle region, where one of the coal-fired plants is located. The new version of the plan also cuts ambitions for solar power as revealed last month , in light of views that the previous aim was too high given France's extensive nuclear fleet. The government now aims for 65-90GW by 2035, down from 75-100GW in the previous plan. It hopes to achieve this aim by launching two tenders per year of 1GW each for ground-mounted solar and three tenders of 300MW each for roof-mounted solar. The roof-mounted tenders "may be adjusted" according to changes made to subsidies, the government said. And one technologically neutral 500MW tender per year will be held. In the past, these tenders typically have been dominated by solar projects. The government has not explicitly decided on a separate tender for agrivoltaic projects, as the solar sector had called for, but it may decide to hold them, deducting any capacity called for from other solar buckets. The trajectory for solar is set at 5GW of projects assigned per year, for 4GW constructed, assuming 20pc of projects do not advance. This then could be modified upwards from 2028-29, to a maximum of 7 GW/yr, if increases in demand and flexibility justify it. On onshore wind, two tenders of 900MW each will be held every year in order to hold the trajectory of construction at roughly 1.5 GW/yr. France's electricity is already substantially decarbonised, thanks to its large nuclear fleet and renewables installations. Fossil fuel-fired plants will only be needed to cover demand spikes and ensure energy security, the government said in the consultation. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Ontario adds 25pc tariff on electricity exports to US


10/03/25
News
10/03/25

Ontario adds 25pc tariff on electricity exports to US

Calgary, 10 March (Argus) — Ontario is imposing a 25pc tariff on electricity exports to the US starting today, carrying through on its threatened retaliation to a trade war started by US president Donald Trump. "We will apply maximum pressure to maximize our leverage, that's why today we're moving forward with a 25pc surcharge on electricity exports for the 1.5mn American homes and business that Ontario powers," Ontario premier Doug Ford said Monday in Toronto. Ontario was the largest exporter of electricity to the US in 2023, sending 15.2 TWh to New York, Michigan and Minnesota. The neighbouring province of Quebec, which exported 13.4 TWh the same year to New York and New England, has said it is also considering its options amid the trade war. Ford added he feels "terrible" because average consumers will pay when it is really Trump who is responsible. The surcharge will cost the US up to $400,000 each day, amounting to an increase of $100 for consumers each month, according to Ford. "I will not hesitate to increase this charge," said Ford. "If necessary, if the United States escalates, I will not hesitate to shut the electricity off completely." Trump on 4 March imposed a 10pc tax on Canadian energy imports, a 25pc tariff on non-energy imports from Canada and a 25pc tariff on all imports from Mexico. But executive orders that he signed on 6 March would exempt North American trade covered by the US-Mexico-Canada (USMCA) free trade agreement from new tariffs after 12:01am eastern time on 7 March. Trump has said he is delaying the tariffs on Canada and Mexico until 2 April, but his executive orders make no mention of that deadline. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

I-REC, I-Track demand soars in Feb alongside supply


10/03/25
News
10/03/25

I-REC, I-Track demand soars in Feb alongside supply

London, 10 March (Argus) — Both redemptions and issuances of international renewable energy certificates (I-RECs) and non-renewable I-Track certificates were nearly 40pc higher year on year in February, with Brazil driving most of the increase. Global I-REC and non-renewable I-Track redemptions totalled 45.1TWh last month, up from 32.8TWh in February 2024, according to data from global registry Evident. Demand last month was at its highest since March last year, when it reached 47TWh. The 12-month rolling average for redemptions was 1TWh higher on the month at 20.6TWh in February. Total demand in January-February stood at 71TWh, nearly a third of the 233TWh cancelled in the whole of last year. Issuances hit 46.2TWh in February, which was up by 38pc year on year and also the highest since 54TWh in March 2024. The 12-month rolling average for issuances rose to 26TWh last month from 25TWh in January. Latin America The number of cancelled I-RECs more than doubled on the year in Latin America to 29.1TWh in February, with issuances having risen by 43pc year on year to 27.4TWh. Both demand and supply in Brazil climbed to about 21TWh last month, compared with less than 10TWh a year earlier. Total demand in January-February reached 23.4TWh, making Brazil the largest I-REC market so far in 2025 ahead of China, which accounted for the largest share last year. Brazil is seeking to address slowing growth in its onshore wind sector, with new legislation expected to speed up the development of the country's first offshore wind projects. The government also has planned several auctions to boost the hydroelectric sector . Argus assessments for current-year Brazilian wind and hydropower I-RECs averaged $0.20/MWh and $0.18/MWh, respectively, in February, each steady on the month. Demand in Chile was at 1.6TWh last month, more than five times higher than a year earlier. Redemptions in Mexico and Colombia increased by about 55pc and 85pc on the year to 2.1TWh and 4TWh, respectively, in February. Mexican prices continued to be volatile, with 2025 wind and solar I-RECs valued at $3.25/MWh at the end of last month, with offers in a wide range of $3.50-4.50/MWh and small volumes having changed hands at $4.15/MWh. South Asia I-REC cancellations in south Asian countries last month nearly tripled on the year to 1.83TWh. India led most of this increase, with demand in the country having risen to 1.79TWh in February compared with just 565GWh a year earlier. Issuances rose more slowly, to 890GWh from 678GWh, with solar power accounting for more than half of the certificates issued last month and taking over from wind, which had accounted for the largest share in February last year. Argus assessments for wind, solar and hydro I-RECs last month averaged $0.79/MWh and $0.86/MWh for the 2024 and 2025 vintages, respectively, having inched down by $0.01-0.03/MWh from January. Asia-Pacific Overall I-REC redemptions slipped by 22pc on the year in Asia-Pacific to 10.2TWh in February, although they edged up from 9.7TWh in January. The decline was driven largely by Malaysia, where demand fell to 2.1TWh last month from 3.5TWh in February 2024. Redemptions also decreased in Singapore, by 80pc year on year to 136GWh last month. Singapore and Malaysia in January agreed to study the formation of a credible framework that recognises renewable energy certificates (RECs) associated with cross-border electricity trade. But policy and regulatory gaps are hampering cross-border REC transactions in the region, according to the Asean Centre for Energy. Argus assessed current-year Malaysian solar I-RECs at an average of $5.55/MWh in February, $0.24/MWh lower on the month. Average assessments for 2025 Singaporean solar I-RECs were down by $3.10/MWh on the month to $75/MWh in February. Demand in China, where the use of I-RECs will officially cease after 31 March, was at about 6TWh in February, broadly steady on the month and on the year. By Giulio Bajona Global I-REC redemptions, Feb 2025 TWh Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US targets 'lower' oil price, no target: Wright


10/03/25
News
10/03/25

US targets 'lower' oil price, no target: Wright

Washington, 10 March (Argus) — US president Donald Trump's administration is pushing for lower oil prices but has set no specific price target and expects to bring more supply into the market through deregulation and permitting reform, US energy secretary Chris Wright says. "We certainly believe it's in the best interest of the American people, and honestly, the citizens of the world to have lower oil prices," Wright said on the sidelines of the CERAWeek by S&P Global conference in Houston. But he added that "I won't have a specific price" and that "the actions of this administration are to make it easier to produce more oil and natural gas for the producers, and therefore you get more investment." Unlike Wright, a former oil industry executive who has taken over the Department of Energy under Trump, other senior advisers to Trump have referred to $50/bl as a preferable oil price target. Those include treasury secretary Scott Bessent and Trump's trade adviser Peter Navarro. Trump's call on Opec to "bring down the price of oil" preceded the producer group's decision last week to proceed with plans to gradually return 2.2mn b/d of supply to the market. "We're pleased, of course, to see Opec returning barrels to the marketplace," Wright said, but he added that the US has made no "specific requests or demands". Climate change as "side effect" Wright, in a speech before the general CERAWeek audience, pounded on former president Joe Biden's administration for allegedly ignoring the concerns of the US oil and gas industry and basing its energy sector decisions on what Wright called "irrational, quasi-religious climate policies". Wright called climate change a "side effect" of economic development. "Everything in life involves trade-offs," he said. The potential benefits of Biden-era climate policies were not worth the "endless sacrifices on our citizens", Wright said. "The Trump administration intends to be much more scientific and mathematically literate." Wright's spirited defense of oil and gas and denunciation of climate change policies drew some applause from the audience. Still, the rapid pace of change in the US energy policy every four years is "not the right policy approach," Chevron chief executive Mike Wirth said at CERAWeek. The Trump administration's executive actions affecting the energy sector need to be backed by legislation that makes permitting reform possible, Wirth said. Wright acknowledged a possible contradiction between Trump's vision for lower oil prices and more output, but said that enabling more investment and new infrastructure would address that dilemma. "It's not just 'drill baby drill', it's also 'build baby build'," Wright said. Nasser supports transition Speaking at a separate panel, Saudi Aramco chief executive Amin Nasser echoed many of the same themes raised by Wright, including the claim that the energy transition did not address the needs of the world's poorest citizens in the emerging economies. But, unlike Wright who appeared to disparage solar and offshore wind resources, Nasser said that Saudi Arabia's energy transformation will make good use of renewable energy sources and will continue to aim to reduce greenhouse gas emissions. Trump's administration surprised the US oil and gas industry on 4 March by proceeding with plans to impose a 10pc tax on Canadian energy imports and a 25pc tax on energy imports from Mexico. Trump lifted the tariffs on 7 March but has said he may bring them back on 2 April. "We have, behind closed doors, vigorous debates about tariffs, people arguing all sides of that," Wright said. "What is the ultimate outcome going to be? We don't know for sure." By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more