Key findings for Q3 2020:
- New records set for minimum electricity demand in VIC, SA and WA
- Wholesale electricity and gas market price decline continues
- Energy demand impact of COVID-19 restrictions
Increasing uptake of rooftop solar (PV) systems coupled with changes in energy use due to the COVID-19 pandemic reduced visible electricity demand across the National Electricity Market (NEM) in the third quarter of 2020. Changes to consumer habits and industrial activity during the pandemic continue to reduce underlying demand, particularly in Victoria where the strictest limits on economic activity have been in place.
As highlighted in the Australian Energy Market Operator’s (AEMO) Quarterly Energy Dynamics (QED) report for Q3 2020, NEM‑average operational demand decreased by 313 megawatts (MW) (1.4%) when compared to Q3 2019, due to increased rooftop PV (218 MW) and reduced underlying demand (-95 MW).
AEMO Managing Director and CEO, Audrey Zibelman, said: “Electricity demand continues to reflect COVID‑19 impacts with reductions observed in Victoria, Queensland and New South Wales, while residential heating drove an increase in electricity demand in South Australia.
“The uptake of residential and commercial solar continues at record pace, which was largely responsible for new minimum operational demand records in Victoria, South Australia and Western Australia,” she said.
According to the QED report, distributed PV met 71% of South Australia’s total energy needs (underlying demand) on 13 September, driving a new daytime minimum demand record of 379 MW. This was 79 MW lower than the previous record from Q4 2019. A Victorian demand record 3,073 MW was achieved on 6 September, 144 MW lower than the previous record set during Q4 2017, with distributed PV accounting for 31% of underlying demand.
“Mainland National Electricity Market (NEM) wholesale electricity prices declined almost 50% compared to the same period last year, reaching their lowest Q3 level since 2014,” Ms Zibelman said.
“Excluding Tasmania, NEM wholesale electricity prices fell by 45-48% compared to the same quarter last year, dropping to the lowest third-quarter level since 2014 ($32‑51/MWh). In addition to lower demand, the reduction was driven by improved reliability of coal-fired generators in New South Wales and Victoria, coupled with a shift in offers from black coal-fired generators to lower prices, and new wind and solar capacity.
“Grid‑scale solar and wind accounted for 14% of the generation mix, up from 12% in Q3 2019 due to increased supply coming into the system. Further, wind and solar output provided a record 35% of total generation on 27 September 2020,” she said.
Gas demand also fell compared to Q3 2019, dropping 5% due to reduced demand for LNG exports (-11 PJ), and reduced gas-powered generation (-9 PJ).
Ms Zibelman said: “Wholesale gas prices reduced almost 50% compared to Q3 2019, reaching the lowest Q3 level since 2015. The Gas Supply Hub (GSH) reaching its lowest quarterly average price since Q4 2015, at $3.85 per gigajoule, while the Victorian price of $4.57 per gigajoule was its lowest since Q1 2016.
“Price decreases were due to lower demand across all sectors, with a continuation of more gas being offered at lower prices into the markets, combined with comparatively low international prices,” she said.
Western Australia’s Wholesale Electricity Market (WEM) logged a new Q3 minimum demand record with operational demand reaching 999 MW on 13 September. The balancing price floor (-$1,000/MWh) in Western Australia was hit six times during the quarter – it had only been previously been reached this threshold three times before in the history of the WEM.
 Underlying demand means all the electricity used by consumers, which can be sourced from the grid but also, increasingly, from other sources including consumers’ rooftop photovoltaic (PV) and battery storage.