Wholesale electricity and gas prices rebound in Q2

2 min

AEMO’s Quarterly Energy Dynamics (QED) report shows a rebound in energy prices during the second quarter of 2021, impacted by a combination of increased demand and incidents that affected electricity supply against a backdrop of higher international energy prices.

Several planned and unplanned thermal generator outages in Queensland, New South Wales and Victoria contributed to mainland wholesale electricity prices rising from a first-quarter average of $37 to $95 a megawatt hour (MWh).

East coast gas market prices were influenced by rising international prices and higher gas-powered generation (GPG) demand increasing to $8.20 per gigajoule (GJ) from $6.03/GJ in the first quarter and nearly double the average of $4.37/GJ in Q2 2020.

AEMO Chief Markets Officer, Violette Mouchaileh, said: “The start to winter tested power system resilience, with generator outages contributing to tightening supply conditions and significant electricity price volatility over the quarter.”

Following incidents at the Callide and Yallourn power stations, GPG and hydro generation provided backup capacity, increasing output significantly from May to June. The sudden increase in gas demand from GPG contributed to rapid depletion of Iona gas storage plant, which fell from a record high of 24.5 petajoules (PJ) on 10 May to finish the quarter at 14.3 PJ, its lowest end of Q2 level on record.

“Despite the resurgence in high prices, negative and zero spot prices were also more common during the quarter occurring in 5.5% of all trading intervals, up from 4% in Q2 2020. Contrasting recent quarters, the occurrence of negative prices was no longer confined to South Australia and Victoria, with increased prevalence in Queensland and Tasmania,” Ms Mouchaileh said.

New wind and solar projects connected to the NEM helped increase generation by 457 MW compared to Q2 2020, reaching 7,368 MW in the quarter, which was 483 MW higher than the previous record set in Q1 2021.

On 11 April 2021, instantaneous renewable penetration, including grid-scale wind and solar, hydro, biomass and rooftop PV, reached a record high 57% of total demand between 11am to 11:30am, up from the previous record of 56% set on 3 October 2020.

“A new Q2 maximum operational demand record was set in the Wholesale Electricity Market (WEM) in Western Australia, reaching 3,528 MW on the coldest day in June,” said Ms Mouchaileh.

“Elevated winter demand arising from cold Perth conditions contributed to a quarterly average Balancing Price of $58/MWh, its highest since Q3 2017, and increased frequency of high price events,” she said.

In early April, Cyclone Seroja damaged transmission lines, impacting 767 MW of installed wind capacity, and disconnected the North Country region from the SWIS for 10 days.  Following repairs to transmission lines, an all-time WEM wind generation record of 945 MW was set on 27 June 2021.


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