AEMO has released its Quarterly Energy Dynamics report, with winter weather leading to different generation trends and driving up electricity prices.
During the June 2024 quarter, low wind speeds and reduced rainfall in the southern NEM regions saw decreases in electricity supplied from wind (-20 per cent) and hydro (-18 per cent), while gas (+16 per cent) and black coal (+7 per cent) rose, helped by increased availability of Queensland’s black coal-fired generators.
AEMO CEO, Daniel Westerman, said, “Colder weather has driven a new record for total electricity demand in the NEM for the June quarter.
“On the east coast we have seen low temperatures and persistent cold snaps, especially in Victoria, which have driven higher morning peak demands through the tail end of autumn and the first month of winter.
“Extended periods of low wind have led to reduced wind generation output which was down 20 per cent from last winter to a quarterly average of 2,657MW, with wind availability down to their lowest levels since Q2 2017.”
Hydro-generation, which is heavily concentrated in southern states, also generated less during the quarter, averaging 1,607MW, a reduction of 18 per cent from 2023 and the lowest output for a Q2 since 2017.
“These market conditions highlight the important role that batteries, pumped hydro and flexible gas generation will play as renewable generation becomes more dominant in Australia’s electricity grids,” Mr Westerman said.
“The role of batteries in supporting morning and evening demand peaks became more prominent, with average generation in those periods more than doubling since last year, reflecting the significant increase in battery capacity.”
According to the report, quarterly wholesale prices averaged $133/MWh in the June 2024 quarter across the NEM, 23 per cent higher than $108/MWh in Q2 2023. By state, year-on-year prices increased in New South Wales ($173/MWh), South Australia ($135/MWh), Tasmania ($131MWh) and Victoria ($127/MWh).
Queensland spot prices fell to $101/MWh, helped by increased black coal availability and less outages, leading to increased offers at prices below $0/MWh, particularly during the day.
“Queensland and New South Wales wholesale prices have generally been above those in the southern regions, driven by a higher contribution of renewable energy in Victoria and South Australia,” Mr Westerman said.
“In the last quarter, Victoria and South Australia experienced higher energy prices than Queensland, because lower output from wind and hydro generation was replaced by higher cost sources.”
The report found that in May 2024, two days of price volatility in New South Wales, including major coal plant outages coinciding with planned transmission outages, contributed $45/MWh to quarterly wholesale prices.
East coast wholesale gas prices averaged $13.66 per gigajoule (GJ) for the quarter, lower than the $14.21/GJ in Q2 2023.
Gas demand increased marginally, mostly driven by higher demand for gas-fired generation, up 18 per cent from Q2 2023.
According to the report, domestic gas supply shifts continued, with declining production from gas fields connected to the Longford Gas Plant in Victoria the main contributor.
During the June 2024 quarter, AEMO notified the gas industry of a potential risk or threat to gas supply in parts of the east coast, due to the rapid decline in Iona underground gas storage inventory.
“These meetings enable AEMO to work with the industry to manage gas supplies across the east coast. They are important in the management of gas supply risks and support AEMO in keeping the market fully informed,” Mr Westerman said.
By contrast, AEMO reported that Western Australia’s Wholesale Electricity Market (WEM) has experienced relatively warmer weather this quarter, resulting in a new Q2 renewable penetration record of 30.8 per cent thanks to a 49MW increase in small-scale solar and a 75MW rise in wind generation.
The higher renewable contribution displaced gas-fired generation, which decreased 134MW during Q2 2024.
According to the report, average operational demand for the quarter fell to 2,000MW, which was 28MW less than the same period in 2023, as a result of higher rooftop solar. The higher distributed photovoltaics generation more than offset the 24MW increase in underlying demand.
The report found that in comparison to Q1 2024, energy prices remained flat (+$0.30/MWh) despite the drop in operational demand from Q1 2024, due to a reduction in quantities offered into the Real-Time Market by coal and gas-fired generation because of facility outages.
In the Western Australian gas market, domestic gas production rose 7.8 per cent to 107.3 PJ on Q2 2023 levels which was reported to be largely a result of Karratha Gas Plant increasing production.
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