Electricity price spikes have reduced as renewable energy grows

Snowtown Wind Farm
Snowtown Wind Farm

A Climate Council report has revealed the number of electricity price spikes in South Australia has tumbled as the state’s share of renewable electricity increased.

The report found electricity price spikes (periods when wholesale prices exceed $5000/MWh) have fallen significantly across the National Electricity Market as the proportion of renewable energy has increased but especially in South Australia.

In 2015, there was just one price spike compared to more than 50 in 2008.

Climate Councillor and energy expert Andrew Stock said recent short-term increases in South Australia’s wholesale power prices were driven primarily by the state’s reliance on expensive gas for power and a lack of competition amongst power generators.

“Queensland, which has less than 5 per cent renewable electricity, has until recently experienced similarly high prices to South Australia and all eastern states have experienced similar short-term price patterns even though power generation in these states is overwhelmingly coal based,” he said.

“This is further evidence that the cause of these price rises are due to a range of industry factors rather than renewable energy.”

The Mythbusting: Electricity prices in South Australia report also found:

  • South Australia is much further ahead than other states in reducing emissions to tackle climate change.
  • Average electricity prices have been historically higher in South Australia due to the state’s more expensive fossil fuel options and lower electricity market competition.
  • Recent events, including very cold weather, work on the interconnector that restricted supply from Victoria and gas prices at almost four times the usual level, put the two main electricity generators in South Australia in an extraordinarily powerful position to increase prices.
  • Increasing competition in the electricity sector by reducing the time intervals set for spot price and developing alternate reserve capacity such as large-scale and distributed energy storage would reduce exposure to short-term price gouging when wind and solar supply are low.
  • Increased interconnection with the eastern states would expand supply options and increase competition with South Australian gas-fuelled power plants.

The Climate Council’s professor Tim Flannery said South Australia’s transition away from coal was consistent with the action required to avoid catastrophic climate change and ensure the survival of the Great Barrier Reef.

“As news emerges that parts of the Great Barrier Reef appear to have suffered total ecosystem collapse with corals continuing to be bleached well into winter, it’s a reminder that we cannot afford to lose sight of why we are transitioning our energy systems,” he said.

“It’s to protect the people and places we love from worsening extreme weather events that are being driven by climate change.”