26 September 2023

Electricity prices soar to new heights

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Wholesale electricity prices jumped 141 per cent in the first quarter of this year compared to the same time last year according to the latest report from the Australian Energy Market Operator (AEMO).

Executive General Manager, Reform Delivery at AEMO, Violette Mouchaileh said the Operator’s Quarterly Energy Dynamics (QED) Q1 2022 report showed that wholesale electricity prices in the National Electricity Market (NEM) averaged $87 per megawatt-hour (MWh) for the first quarter (Q1) of 2022, up 67 per cent from Q4 2021, and 141 per cent from Q1 2021.

Ms Mouchaileh said the price jump was driven by increased demand, coal generator outages and higher electricity-generating fuel costs.

“The quarter highlighted the ongoing electricity price gap between northern and southern NEM States,” Ms Mouchaileh said.

“Wholesale prices in Queensland and NSW were again significantly higher than in southern States,” she said.

“This was due to the larger price-setting role of black coal generation and system security constraints limiting daytime electricity transfers from Victoria into NSW, despite an average energy price difference of $48/MWh.”

Ms Mouchaileh said compared to Q1 2021, over 3,000 MW of black coal offers shifted from lower-price bands to above $60/MWh – “the largest year-on-year quarterly change since 1998”.

She said that for the first time in the NEM, Wholesale Demand Response capacity was dispatched due to Victorian and South Australian afternoon spot prices spiking to high levels in January.

Ms Mouchaileh said gas demand remained stable through Q1 2022, with east coast prices at near-record levels across all AEMO markets, averaging $9.93 per gigajoule (GJ) for the quarter, “up strongly on their average of $6.05/GJ in Q1 2021”.

She said wind and grid-scale solar output increased 743 megawatts (MW) from Q1 2021 levels to a new quarterly record of 4,190 MW, along with increases in small-scale solar (460 MW), gas (271 MW) and hydro (42 MW).

Ms Mouchaileh said NEM emissions hit a record first-quarter low at 30.4 million tonnes carbon dioxide equivalent, four per cent lower than a year ago.

AEMO’s 62-page QED Report can be accessed at this PS News link.

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