AEMO’s Quarterly Energy Dynamics report, released today, highlights the important role of flexible gas-powered generation as the ultimate backstop for the National Electricity Market (NEM) during periods of reduced renewable generation.
During the June quarter, low wind speeds and reduced rainfall in the southern NEM regions saw decreases in electricity supplied from wind (-20%) and hydro (-18%), while gas (+16%) and black coal (+7%) 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% from last winter to a quarterly average of 2,657 MW, with wind availability down to their lowest levels since Q2 2017,” he said.
Hydro-generation, which is heavily concentrated in southern states, also generated less during the quarter, averaging 1,607 MW, a reduction of 18% from last year 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,” he said.
Quarterly wholesale prices averaged $133/MWh this quarter across the NEM, 23% higher than $108/MWh in Q2 2023. By state, year-on-year prices increased in NSW ($173/MWh), SA ($135/MWh), TAS ($131MWh) and VIC ($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,” he said.
In May, two days of price volatility in NSW, 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% from Q2 2023.
Domestic gas supply shifts continued, with declining production from gas fields connected to the Longford Gas Plant in Victoria the main contributor.
The quarter also saw AEMO notify 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 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% thanks to a 49 MW increase in small-scale solar and a 75 MW rise in wind generation.
The higher renewable contribution displaced gas-fired generation, which decreased 134 MW during Q2.
As a result of higher rooftop solar generation, average operational demand for the quarter fell to 2,000 MW, which was 28 MW less than the same period in 2023. The higher distributed photovoltaics (DPV) generation more than offset the 24 MW increase in underlying demand.
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 WA gas market, domestic gas production rose 7.8% to 107.3 PJ on Q2 2023 levels which was largely a result of Karratha Gas Plant increasing production.
ENDS