ENERGY MARKET UPDATE

In this article we provide insights into key electricity market observations of last month’s Base Future pricing and delve into the Economist latest report which marks the beginning of the “Dawn of Solar” which has caught experts of guard by this rapid growth.

Key Electricity Market Observations This Month

• The energy sector has seen price stabilisation in wholesale futures across the board.
• Generator outages we saw back in June have not continued through to July, allowing spot and future prices to soften.
• The New South Wales Government extended the operation of the Eraring Power Station until 2027, possibly to 2029, to ensure energy reliability.

We will be monitoring both the short term and the long-term forecast for our customers and clients. 

Solar Power’s Unstoppable Rise

The Economist’s latest report marks the beginning of what it calls the “Dawn of the Solar Age,” highlighting the rapid ascent of solar power as nuclear energy stagnates. By the mid-2030s, solar power is projected to become the world’s leading source of electricity, and by the 2040s, it could surpass fossil fuels like coal and oil to become the dominant energy source globally.

Experts were caught off guard by this rapid growth. The International Energy Agency (IEA) has consistently underestimated solar expansion since 2009, with actual installations exceeding predictions by more than three times. Even Greenpeace’s previously optimistic forecasts fell short of the remarkable growth observed. The Economist anticipates that the next tenfold increase will occur even faster than the time it takes to build new nuclear reactors. In 2004, it took a full year to install 1 gigawatt of solar capacity (enough to power a small city). Today, this milestone is reached every day.

The falling cost of solar cells is a key factor driving this expansion. As production increases, costs decrease, which boosts demand and further reduces prices. Unlike traditional energy sources, which become more expensive over time, solar cells benefit from their primary material, sand, which is plentiful. China and India are at the forefront of manufacturing and installing solar cells, contributing significantly to this growth.

In Australia, solar power is already impacting electricity prices. States like South Australia and Tasmania, which rely heavily on renewable energy, enjoy some of the lowest electricity prices in the country, just behind Victoria, which benefits from its reliance on brown coal. The Economist emphasizes that low prices, rather than environmental concerns, are driving the adoption of solar energy. As solar power becomes increasingly affordable and widespread, it is expected to be used in innovative ways, driven by the forces of technological progress and market dynamics.

For the article by The Economist – The exponential growth of solar power will change the world (economist.com)

For more detailed Electricity Mix data from around the world – Electricity Mix – Our World in Data

Article contributed by Max Harrison, HumEnergy