South Australia has recorded the biggest price drops for wholesale electricity and gas in the nation, a new report by the Australian Energy Market Operator (AEMO) shows.
The falls indicate that the global gas price shocks are easing, and that renewable energy is driving down costs in South Australia.
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The latest AEMO quarterly report shows the average wholesale electricity price for the first quarter of this year was $55 per megawatt hour in South Australia. That was $17—or 24%—lower than the average for Q1 in 2023.
Prices in Queensland ($118/MWh, up 13%) were more than double the South Australian average, and South Australia was cheaper than New South Wales ($87/MWh, down 13%) and Tasmania ($67/MWh, down 17%).
Wholesale price changes flow through to the retail prices paid by households and small businesses. The AEMO report follows the announcement last month by the Australian Energy Regulator that it intends to cut benchmark retail prices—the Default Market Offer (DMO)—from July. Its draft DMO signals cuts of up to 2.5% for households and 8.2% for small business. These cuts are being driven by falling wholesale prices.
The AEMO report corresponds with a recent AER report on the first quarter of this year, which uses different methodology but draws the same conclusion—South Australia’s prices fell the most of any state.
The Tailem Bend Stage 2 solar farm joined South Australia’s generation fleet in the first quarter of 2024.
The impact of the new Torrens Island Battery was shown with South Australia recording the largest year-on-year increase in revenue for batteries. The $20.4 million revenue was up from $9.3 million in Q1 of 2023.
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South Australian Energy Minister Tom Koutsantonis said, “These proven falls in wholesale prices are encouraging signs that we are on the right track.
“South Australia’s high proportion of renewables—which exceeded 75% of generation in 2023—is key to South Australian prices being far lower than the black-coal states of New South Wales and Queensland.”
