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The Australian Energy Regulator’s (AER) Wholesale Markets Quarterly latest figures (Q3 2021) have revealed that Australia’s national electricity market is on the pathway to transitioning to renewable energy. 

Records broken between July and September (Q3) include:

  • Record rooftop solar output in every region, and a 26 per cent increase in total rooftop solar generation compared to the same time in 2020
  • Record levels of wind generation in every region, meeting 14 per cent of total National Electricity Market (NEM) demand
  • Record minimum black coal generation for Q3 (first time it fell below 50 per cent of total output during the Q3 months
  • Record number of negative prices in every region
  • Record minimum Q3 demand for electricity generation in Victoria
  • South Australia had its lowest minimum demand ever recorded, but also hit a Q3 record for maximum demand
  • Tasmania again had the lowest average quarterly wholesale price at $27/MWh, the lowest in any region of the National Electricity Market (NEM) since 2012
  • Queensland had the highest quarterly average at $90/MWh, followed by New South Wales ($88/MWh), Victoria ($64/MWh) and South Australia ($63/MWh)

The quarter featured a record number of negatively priced trading intervals, occurring three times more than in the previous quarter and nearly four times the amount in that same period in 2020, reflecting the impact of record rooftop solar output in every region. 

Prices were negative 25 per cent of the time in South Australian and 20 per cent of the time in Victoria.

In Victoria, minimum demand from the grid hit a record quarterly low of 2,631MW while South Australia hit an all-time low of 265MW.

The cost of maintaining system frequency through contingency Frequency Control Ancillary Services (FCAS) remained high, reaching a Q3 record of $130 million, with local Queensland costs of $71 million being the main driver of this result.

AER Chair, Clare Savage, said the quarterly results provided stark evidence of the pace of market transition.

“These up-and-down results tell the story of a changing market,” Ms Savage said.

“The mix of generation continues to swing towards renewables with almost 1200MW of new wind, battery and solar capacity entering the market in July, August and September.

“We expect more quarterly records to be broken as levels of renewable penetration increase in the NEM.”

Growing maturity in gas markets

The gas markets experienced unprecedented domestic and international daily price spikes, due to colder July temperatures, supply outages in Victoria, and higher global demand.

Prices jumped above $20/GJ early in July, but in the face of high global prices, they retreated and remained relatively low for the rest of the quarter, averaging between $6.70/GJ and $10/GJ in August and September.

Domestic gas production was at an all-time high and international demand for Australia’s liquified natural gas remains strong with results showing a Q3 record for export volumes.

Ms Savage said increased participation in the spot markets and day ahead auctions indicated a growing maturity of the gas markets.

“Interlinkages between gas and electricity markets also appear to be increasing, with higher prices paid intermittently for auction capacity this quarter, up to a record $1.70/GJ on pipeline routes servicing gas-powered generators,” Ms Savage said. 

The Q3 Wholesale Markets Quarterly includes a special analysis on competition in the gas spot markets, as well as an overview of the introduction of five-minute settlements in the national electricity market. 

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