Australian electricity prices across the National Electricity Market (NEM) have fallen to their lowest Q1 level in five years, according to the Australian Energy Regulator’s (AER) latest report.
The AER’s Wholesale Markets Quarterly found that Q1 2020 marked the first time since 2015 that Q1 wholesale electricity prices were below $110 per MWh in all regions.
Individual states also recorded the lowest Q1 prices in many years:
- Queensland (2012)
- Tasmania (2015)
- South Australia (2016)
- Victoria (2017)
AER Chair, Clare Savage, said there were a number of factors behind the falling prices.
“Weather conditions during the period were generally mild, notwithstanding some extreme events and high demand early in the quarter,” Ms Savage said.
“There were reduced costs for gas and coal generators which meant they could offer electricity into the wholesale market at lower prices. There was also an increase in the amount of low priced solar generation coming into the market.”
Ms Savage said that the increasing amounts of low priced renewable generation and lower offers from coal and gas generators were highlighting an emerging trend in the NEM.
“After an extended period where wholesale electricity prices rose and rose, we’re now seeing lower underlying wholesale electricity prices across the NEM.”
In the gas sector, prices in all markets were at the lowest levels since Q1 2016, ranging from $5.20 in Brisbane to $6.27 per GJ in Adelaide.
“This is the fifth quarter in a row that gas prices fell in the Brisbane, Victoria and Sydney markets, and this quarter identifies a positive long-term correlation between LNG netback and domestic spot gas prices,” Ms Savage said.
“Households and businesses should benefit as lower international prices for gas continue in 2020 and into next year. We expect local spot prices for gas to follow the international lead here.”
The Q1 2020 edition of Wholesale Markets Quarterly also outlines how extreme weather conditions and bushfires resulted in short periods of high prices in January 2020 across New South Wales, Victoria and South Australia.
These quarterly reports inform the AER’s biennial Wholesale Electricity Market Performance Report, which provides longer-term analysis of NEM performance. The 2020 report is due in November.
View the Q1 2020 edition of Wholesale Markets Quarterly here.
