Record levels of renewable energy generation drove down electricity prices across Australia in the September quarter, with prices zero or negative for one-sixth of the period, the Australian Energy Market Operator (AEMO) reported.
AEMO’s latest Quarterly Energy Dynamics report shows renewable energy continued to set new records during the September quarter, reaching 61.4 per cent instantaneous penetration1 and supplying 31.7 per cent of total electricity generated in the National Electricity Market (NEM).
For the quarter, electricity from wind, solar and hydro plants supplied almost a third of demand in the national electricity market, at a record 31.7 per cent. For one 30-minute period on September 24, renewables met 61.4 per cent of demand—also a fresh high.
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The share of black coal in the electricity mix fell below half for the first time for a September quarter, while the share of gas also retreated from a year earlier.
Renewable output was boosted by commissioning and ramp-up of new wind and solar generation over the seasonally windy quarter, higher distributed PV (+341MW on average) combined with higher rainfall driving increased hydro output from Tasmania.
AEMO chief markets officer Violette Mouchaileh said the quarter began with a continuation of volatile market conditions experienced during May and June.
“In July, mainland NEM electricity prices averaged $111/MWh and gas prices were $15.61/GJ. This price volatility was influenced by an outage at the Longford Gas Plant reducing gas supply coinciding with low storage levels in Victoria and higher international gas prices creating strong liquefied natural gas (LNG) export demand,” she said.
“However, following Longford’s return to full production and with milder weather these conditions stabilised with September gas prices falling to $8.09/GJ and mainland NEM electricity prices averaging $37/MWh.
“This trend of falling prices through the quarter was in sharp contrast to international energy prices for LNG and coal which continued to rise throughout the quarter reaching record levels.”
The increase in renewable energy supply, combined with a mild August and COVID-19 restrictions reducing demand, led to wholesale electricity prices being negative or zero for 16 per cent of trading intervals, more than double the previous record of 7 per cent in Q4 2020.
In Victoria, average spot prices between 10am and 3:30pm fell from $30/MWh in 2020 to just $0.01/MWh during August and September. This follows South Australia achieving average daytime prices below zero consistently between 10am and 3:30pm (AEST) during the March 2021 quarter, the first time in the NEM’s history.
“The continued growth in distributed PV pushed minimum operational demand levels to record lows. In New South Wales, minimum demand from the grid fell to 4,872MW, the lowest level since Q1 2000, while South Australia’s minimum demand record fell by 21 per cent to 236MW,” Mouchaileh said.
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Similar to the NEM, Western Australia’s Wholesale Electricity Market (WEM) set new renewable energy records, contributing 25 per cent of total demand for the quarter and a 70 per cent instantaneous renewable penetration record on September 7.
Total Western Australia domestic gas consumption decreased by 4.7PJ from Q3 2020 to 95.3PJ. Total gas supply was 97PJ, which is 4.1PJ less than Q3 2020 and decreased in line with changes in total consumption.
GPG output decreased by 20 per cent in Q3 2021 from Q3 2020 due to higher coal availability (+7 per cent) and increased output from wind (+36 per cent), solar (+89 per cent) and distributed PV (+13 per cent) with an additional 379MW of distributed PV capacity added in the last year.
