Prices and volumes disconnected
Spot electricity prices remained on average high and volatile during the week. On average prices were way higher than a year ago, but consumption in the National Electricity Market (NEM) is down 4 per cent over the previous corresponding period (PCP) on a 30 day moving average basis.
Electricity consumption fell sharply in the week
NSW consumption was down 6 per cent in NSW and Victoria and down 5 per cent across the NEM
Utility shares had a mixed week. Origin continued to perform well on the back of the increase in the oil price and is now up 24 per cent from January 1, although still massively below the levels of the prior eight years. Infigen and RedFlow remain in favour with investors, RedFlow arguably driven by its executive chairman becoming more involved; and Infigen was reported by the AFR to be attracting some corporate interest.
We will return to this theme in another article, but it’s our belief that from a “Porter’s 5 forces” point of view the renewable industry is fragmented, with the utilities having all the “buyer power”. In our view, one factor that could help the renewable target to be reached would be some consolidation among the many owners of wind farm development sites.
Porter’s five forces
David Leitch was a Utility Analyst for leading investment banks over the past 30 years. The views expressed are his own. Please note our new section, Energy Markets, which will include analysis from Leitch on the energy markets and broader energy issues. And also note our live generation widget, and the APVI solar contribution.