Record generation from grid-scale renewables and rooftop solar is triggering wholesale energy prices and greenhouse emissions to fall, according to AEMO’s latest quarterly analysis of Australian energy markets.
The Quarterly Energy Dynamics report for the last quarter of 2023 shows that new records are being set for the amount of renewable energy being fed into the grid, reducing the reliance on traditional coal-fired generation.
AEMO CEO, Daniel Westerman, said wholesale electricity prices on the east coast have halved from 2022 levels, reflecting the increasing role that low-cost renewables are playing in daily generation.
“More low-cost renewable energy was generated and wholesale energy prices have fallen – a record number of times to zero, and beyond, into negative territory,” Mr Westerman said.
Wholesale electricity prices in the National Electricity Market (NEM) averaged $48 per megawatt hour (MWh) in Q4 2023, which is a drop of 24% from Q3 2023 and down 48%, or half, from Q4 2022. Contributing to the falling electricity prices was record generation output from grid-scale renewables, rooftop solar, together with lower prices for thermal coal.
The increase in renewable output also drove NEM total emissions and emissions intensity to all-time record lows.
Mr Westerman said there are moments in time that show us just how fast the transition is happening.
“Early in the afternoon of 31 December rooftop solar met 101% of South Australia's total electricity demand,” he said.
“While on the afternoon of 24 October rooftop solar and grid-scale renewables provided 72% of all electricity across the east coast.
“These events are snapshots of the transition that’s happening, and they are becoming more frequent.
“We are regularly seeing records set for the higher contribution of renewables, and lower levels of energy drawn from the grid because of rooftop solar.
“As our coal fired generators retire, renewable generation, batteries, hydro, new gas fired power plants, and new transmission will power our homes and businesses.”
Victoria recorded the lowest average quarterly prices at $26/MWh, followed by South Australia ($33/MWh), Tasmania ($50/MWh), New South Wales ($66/MWh) and Queensland ($68/MWh).
The report revealed that in Q4, 20% of dispatch intervals across the NEM registered negative or zero prices, which marks a 3.3 percentage point increase compared to the same period last year and a new high for any quarter.
“We know zero prices mainly happen in the middle of the day, and are being driven by low-cost renewable generation,” Mr Westerman explained.
“This represents a great opportunity for Australia’s energy market.
“With the right energy storage, like batteries and pumped hydro, the benefits of free and low-cost energy can be spread further across the day.
“The right storage means we can charge batteries and pump water up hills in the middle of the day when prices are low, and that energy can be released back into the grid during the evening peak when people get home from and school and work.”
Wholesale gas prices in the east coast market also continued a downward trend during the fourth quarter.
East coast wholesale gas prices averaged $10.83 per gigajoule (GJ), which is significantly lower than Q4 2022's $17.79/GJ, though slightly higher than $10.41/GJ in Q3 2022.
In Western Australia's Wholesale Electricity Market (WEM), a severe heatwave drove electricity demand to a record of 4,046 megawatts, pushing electricity prices higher.
The average wholesale electricity price increased for Q4 2023 – rising to $83.83/MWh, up 15% compared to Q4 2022, but lower than historically high prices observed in Q2 and Q3 2023.
Several major milestones were also achieved during Q4 2023, with WA’s modernised electricity market going live on 1 October following extensive reforms.
Generators now receive instructions every five minutes to ensure secure, reliable and lowest cost supply for customers, while enabling higher levels of renewable energy and harnessing advanced technologies, including grid-scale storage.
Domestic gas production lifted to 105.4 PJ in Q4 for the state – up 5.1 PJ on Q3 2023 levels and 1.7% on Q4 2022 output.
ENDS