AER report highlights sector’s changing dynamics

The Australian Energy Regulator has published its 10th annual State of the Energy Market report.

The report, which highlights the changing dynamics across the entire energy sector, draws together data and analysis to illustrate key trends and drivers of change in the energy industry, as well as current challenges and how stakeholders are responding.

The 2017 report shows wholesale gas and electricity markets are becoming increasingly interdependent, with high gas fuel costs contributing to higher electricity prices.

Supply and demand in the market is tightening, with the retirement of some coal generators.

Changes in the eastern gas market are highlighted along with the range of market, government and regulatory responses prompted by concerns of possible supply shortfalls.

AER chair Paula Conboy said the past 18 months have been some of the most challenging Australia’s energy sector has experiences since the National Electricity Market was established almost 20 years ago.

“Growing investment in renewable generation is requiring a greater understanding of the services needed to support power system security, the focus of much work across the sector,” she said.

“It is vitally important market arrangements continue to evolve and adapt as the energy sector transitions.”

The report also showed the impact rising wholesale gas and electricity costs are having on retail prices.

Although these are being partially offset by lower network costs, electricity retail prices trended higher in 2016, except in Victoria, with the sharpest rises in NSW and South Australia.