Emissions from Australia’s main electricity grid dropped more than 6% in the June quarter from a year ago to a record low for the period, and wholesale prices stabilised, the Australian Energy Market Operator (Aemo) said.
For the June quarter, wholesale power prices averaged $108 a megawatt hour on the national electricity market (NEM), down almost 60% from the same period a year ago when the market was suspended during a short-lived energy crisis.
Still the prices were almost a third higher than in the March quarter of this year. Aemo downplayed the impact of the closure of the Liddell power station in the New South Wales Hunter Valley in April, saying black coal-fired plants actually offered more output for the quarter.
The rise of renewable energy, particularly rooftop solar, increasingly nudged out fossil fuels from the grid. Both black and brown coal power plants reported lower utilisation rates during the quarter.
“Increased market share of lower marginal-cost renewables helped push down the wholesale electricity cost from [the June quarter of] 2022, despite this quarter having the highest Q2 underlying demand recorded since 2016,” said Violette Mouchaileh, an Aemo executive general manager.
“Rooftop solar generation increased 30% from Q2 2022,” Mouchaileh said. “Coupled with higher renewable output, wholesale prices were zero or negative [for] 9% of the quarter throughout the NEM, a new Q2 record.”
The electricity industry remains Australia’s biggest source of greenhouse emissions but has more competitive low-carbon alternatives than other sectors. During the quarter, emissions from the NEM – which serves about 80% of the population – dropped 6.6% from a year earlier to 28.7m tonnes of carbon dioxide-equivalent.
Aemo’s report covers most of the trends highlighted by the Australian Energy Regulator a week ago. It carries, though, more detail about emissions and prices.
Power prices started to soar about a year ago after Russia’s invasion of Ukraine triggered sanctions and then a scramble by buyers for non-Russian energy supplies. Black coal and gas prices soared globally, prompting the Australian government to impose domestic price limits for both to help limit the leap in electricity prices.
The energy minister, Chris Bowen, said the year-on-year drop in wholesale prices was “in no small part due to the Albanese government’s immediate intervention to cap coal and gas prices – which the LNP opposed and said they will repeal”.
East coast gas prices during the June quarter remained elevated. Wholesale gas prices averaged $14.20 a gigajoule this year, the second-highest for the period after last year’s record rate of $28.39 a gigajoule.
Gas continued its retreat as a source of electricity generation, averaging just 1,469MW for the quarter. That tally was down a third from the June quarter of 2022 and the lowest output for any April-June period since 2006, Aemo said.
Overall, power prices were less volatile without the repeat of the June 2022 energy crisis when a lack of available coal plants combined with cold weather and fewer windy days. Wholesale power prices exceeded $300 a MWh for about a quarter of the trading intervals during the June quarter of 2022 and just 3% of them in the quarter that just ended.
For the quarter, rooftop solar increased its proportion of the market by 1.8 percentage points, grid solar expanded by 1.4 points, wind 1.6 points and brown coal 0.2 points. Gas lost 3.2 percentage points, hydro 1.2 points and black coal shrank its share by 0.6 points.
All up the fossil-fuel plants contributed about 64.4% of NEM supply in the quarter, down from almost 68% in the June quarter last year.
The share of renewables might have advanced even more if not for limits on grid capacity. About 61MW of generation on average was lost from solar and windfarms for the quarter, up from 41MW a year earlier.
