AEMO’s Quarterly Energy Dynamics report has shown less market volatility has resulted in a drop of electricity prices compared to the 2022 quarter.
The report from AEMO shows that from April to June, wholesale electricity prices in the National Electricity Market (NEM) average $108/MWh, which is 59 per cent lower than the record high quarterly price set in the second quarter of 2022 when the NEM was suspended, but 31 per cent higher than the March quarter.
The average quarterly prices varied by region, ranging from $64/MWh in Tasmania to $137/MWh in New South Wales and Victoria, South Australia and Queensland averaging $89/MWh, $124/MWh and $126/MWh respectively.
NEM total emissions declined this quarter to the lowest Q2 level on record, of 28.7 million tonnes of carbon dioxide, 6.6 per cent lower than Q2 2022, whilst emissions intensity dropped 4.3 per cent to 0.61 tCO2 e/MWh.
AEMO Executive General Manager for Reform Delivery, Violette Mouchaileh, said that the less volatile market conditions have put downward pressure on wholesale electricity prices through less volatile market conditions.
“Increased market share of lower marginal-cost renewables helped push down the wholesale electricity cost from Q2 2022, despite this quarter having the highest Q2 underlying demand recorded since 2016,” Ms Mouchaileh said.
“In addition to increased wind and grid-scale solar output, lower thermal-coal costs and a net increase in black-coal generation availability in New South Wales – despite the retirement of the Liddell Power Station – helped reduce year-on-year wholesale prices.”
“Rooftop solar generation increased 30 per cent from Q2 2022, which reduced electricity demand from the grid. Coupled with higher renewable output, wholesale prices were zero or negative nine per cent of the quarter throughout the NEM, a new Q2 record,” Ms Mouchaileh said.
The AMEO report has also shown a shift in domestic gas supply which is driven by the declining production from gas fields connected to the Longford Gas Plant in Victoria. Aggregate Longford production decreased by nearly 25 PJ compared to Q2 2022, and daily production levels also decreased.
Director of Independent Public Interest Think Tank Climate Energy Finance, Tim Buckley, said that the drop in wholesale electricity prices is a relief for fossil fuel hyperinflation.
“AEMO reports the June quarter wholesale electricity prices are down 59 per cent year-on-year. That is a major relief after 18 months of unprecedented fossil fuel hyperinflation,” . Mr Buckley said.
“Application approvals of new zero-emissions replacement capacity in financial year 2023 trebled to 7 gigawatts (GW) vs the previous two years, but we are still not seeing grid transmission and planning access bottlenecks removed.,” Mr Buckley said.
“There is a record 30GW of new renewable energy capacity now in the connection pipeline, but just 3GW was completed in the financial year 2023. We need to see the rate of completions double to replace end-of-life coal power station capacity inevitably and predictably coming offline.
“The solution is not to extend the life of polluting, unreliable coal clunkers. The answer to high power prices is hastening the transition to low-cost renewables. Governments need to invest in and expedite the buildout of solar, wind, storage and grid transmission. This will put permanent downward pressure on prices, relieving cost of living pressures smashing Australians,” said Mr Buckley.