Growing investment in renewable generation across the National Electricity Market (NEM) has driven new records in the September quarter, peaking with an all-time instantaneous renewable generation record at 64.1% on 18 September, up 2.2 percentage points from the previous record set in Q4 2021.
The Quarterly Energy Dynamics (QED) report for Q3 2022 shows emissions in the NEM dropped to the lowest Q3 level on record, as grid-scale solar and wind generation reached a new quarterly average record at 4,465 megawatts (MW), up 7% from the previous record in Q1 2022.
AEMO Executive General Manager Reform Delivery, Violette Mouchaileh, said: “Easing COVID restrictions and La Niña conditions contributed to a 2.6% growth in quarterly average operational demand relative to Q3 2021, the first year-on-year Q3 operational demand increase since 2015.”
“While wind speeds and solar irradiation were lower in Q3, the increased demand was partially offset by approximately 770 MW of increased output from existing and new renewable generation, along with network investments in system strength decreasing curtailments.
“Average operational demand in Western Australia’s Wholesale Electricity Market (WEM) also increased by 2% compared to Q3 2021, with 30% of all energy demand met by renewable generation, another Q3 record,” she said.
Mild and sunny conditions in September helped set new minimum operational demand records in both the NEM (12,583 MW on 25 September) and the WEM (742 MW on 11 September), a trend which continued in multiple regions through October.
NEM wholesale electricity spot prices[1] remained at near record levels through Q3 at an average $216 per megawatt-hour (MWh), over three times higher than Q3 2021, but slightly down from the $264/MWh average in Q2 2022.
“Drivers that set the prices in Q2 continued in the September quarter, including high international energy commodity prices, increased demand and price volatility with 24% of dispatch intervals priced over $300/MWh in Q3,” said Ms Mouchaileh.
The WEM weighted average Balancing Price[2] reached a high of $77.30/MWh, a 44% increase from last year’s Q3 average. High demand, decreased coal-fired generation availability (36% lower than Q3 2021), and change in fuel mix, including a 49% increase in gas consumed for electricity generation, were all contributing factors to the WEM price highs.
East coast gas prices recorded a similar high, averaging $26 per gigajoule (GJ) over the quarter, a 142% increase from the Q3 2021 average of $10.74/GJ and only slightly below $28.40/GJ in Q2. An administered price cap of $40/GJ in Victoria’s Declared Wholesale Gas Market (DWGM) ended on 1 August 2022.
While total east coast gas demand decreased by 2.6% compared to Q3 2021, demand from gas-fired generators remained elevated during the quarter, particularly in Victoria (+85%) and New South Wales (+41%). Gas supply constraints in early July meant AEMO issued a threat to system security in the DWGM on 11 and 18 July, then on 19 July activated the Gas Supply Guarantee mechanism to secure additional gas supplies to support gas-powered electricity generation in the NEM. All were lifted on 30 September 2022.
In WA, overall domestic gas consumption increased 9% from Q3 2021 levels, making gas the primary fuel for the quarter providing 45% of underlying demand.
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[1] Wholesale electricity prices refer to the value of energy traded between participants in the NEM, and affect only one component of the retail energy bills that consumers pay. In addition to wholesale energy purchases, costs that retailers incur to supply electricity to consumers include transmission and distribution network charges, environmental costs and retail operating expenses. Uses the time-weighted average which is the simple average of regional wholesale electricity spot prices in the quarter. The Australian Energy Regulator (AER) reports the volume-weighted average spot price which is weighted against native demand.
[2] The weighted average Balancing Price is a measure of the average Balancing Price that puts greater weighting on intervals where greater quantity is generated. This is to reflect the average Balancing Price more accurately against quantity of electricity generated, rather than against intervals. Weighted average Balancing Price is sum(Balancing Price * EOI Demand)/sum(EOI Demand) across the quarter.