It’s Chris here, co-founder and co-CEO of Amber.
We’ve seen some unusual energy market activity so far in April, so I’m writing to give some context on what’s happening, what we expect to happen over the next few months, and how Amber is here to help our customers.
What’s been happening over the last few days
As April kicks off, we’ve seen some unusually elevated pricing. A number of factors are at play, including very low wind power across Australia and a higher than usual number of major coal and gas stations temporarily offline. We expect that these factors will ease off over the next few days and these short-term price impacts will start to reduce.
Global energy markets
At a big picture level, there’s a larger, systematic cause of the recent higher prices that’s likely to last longer: the impact of the global energy markets on Australia’s electricity costs. Energy markets globally have been extremely volatile the last six months, driven by low gas supply in Europe, accelerated economic activity as the world comes out of the pandemic, and now most significantly, sanctions on Russia - a large global exporter of fossil fuels.
Overall, Australia has been relatively protected from some of this global volatility, but increasingly we are seeing this flow through into the price of coal and gas here in Australia. This unfortunately means that the price of electricity in Australia is being pushed up and fossil fuel companies are starting to rake in record profits.
In recent days we’re seeing this price pressure both in the wholesale market, but also in the hedging market, where us and all other retailers buy hedging products based on expectations of future energy prices.
How we protect our customers
We have insurances in place to protect against these kinds of sharp price movements in the energy market (customers can see this on your bill as “Price Protection Hedging”). If prices remain elevated then these insurances will pay out to us, and we’ll compensate our customers. We’ll also attempt to make payouts early to help smooth any impact on your bills.
What Amber customers (and anyone, quite frankly) can do
Times like this are in many ways when load shifting becomes most important. The more we can all use power when there’s a lot of renewable energy in the grid, the less we’ll all contribute to coal and gas firms’ record profits. Using more renewable energy today also means more renewable projects getting built in the future, which is the only long-term path away from this fossil-fuel driven volatility. If you're not already an Amber customer but are keen to shift your energy use to greener times, download the free version of the Amber app to find out when the most renewables are in the grid.
This upward pressure on wholesale prices also represents a real opportunity for Amber customers with solar (especially if paired with a battery), as these higher prices mean higher earnings for your exports.
We’ve made sure Amber customers are well protected from the short-term volatility we’re seeing in the markets. But the truth is that if prices remain elevated in the hedging markets then that will start to push up prices for all retailers over the next few months. We always want to be super transparent with our customers, which is why we’re sharing this now.
We’ll be watching markets extremely closely and working with our customers to help them reduce their bills, maximise their earnings, and accelerate the transition to 100% renewables.
Please reach out to us if there’s anything we can do to help in the meantime.