Wholesale power prices across much of eastern Australia were sharply higher in the September quarter from a year earlier because of increased reliance on gas, hydro and batteries, the Australian Energy Regulator said in its quarterly report.
Average prices ranged from $114/megawatt-hour in Queensland to $201/MWh in South Australia. The biggest year-on-year increases were in Tasmania, with prices up 290%, Victoria’s increasing 114% and SA’s 76% higher.
Compared with the June quarter, though, the changes were mixed and less abrupt. New South Wales saw a 25% reduction, with Victoria’s down 9% and Tasmania’s 12%. SA posted a 35% quarter-on-quarter rise and Queensland’s edged 5% higher.
Wholesale power prices make up about a third of a typical retail bill. Many households will probably see lower bills for the September quarter, in part because of big rebates paid in July in Queensland and Western Australia, and the start of four quarterly payments from the commonwealth of $75.
The jump in year-on-year wholesale power prices was driven in part by more volatile supplies of wind energy that prompted more use of expensive gas, hydro and battery-sourced electricity. Average wind generation was 52% higher than the previous quarter and 21% more than in the September quarter of 2023, but more variable.
Gas set the price significantly in the national electricity market, ranging from $108/MWh more in SA to $159/MWh more in NSW. “While not at record levels, Q3 prices were one of the highest,” the AER said.
Gas supply shortages, particularly in Victoria, prompted the Australian Energy Market Operator to issue a “system risk” or “threat notice” on 19 June. That notice was revoked on 23 August as milder weather assisted the recovery of storage levels.
There were also more unplanned outages, particularly in SA, a state that accounted for half of the 54 periods when wholesale prices exceeded $5,000/MWh for 30-minute intervals. These hoisted average prices by $77/MWh in SA alone, while the high-priced periods also hiked prices in NSW and Victoria by $28-29/MWh.
Network outages affected SA’s links with other states, contributing to the high prices. The report may also examine the behaviour of generators, with the AER noting “some market participants rebid by shifting offers to higher price bands which reduced low-priced capacity further”.
The jolt to prices may not be lasting as “forward prices declined slightly suggesting the recent high-price events have not flowed through to future prices”, the AER said.
Outages at so-called baseload plants – such as coal – were higher than in the June quarter. Queensland outages were up 63% to 757MW on average, while those in NSW rose 42% to 350MW in NSW. Victorian outages averaged 222MW, or a drop of 37%.
Electricity demand was higher across the national electricity market, ranging from 2% higher in Queensland to 5% in Victoria.
