The growth in renewables over the past year has had a major impact on Australia’s main electricity grid, with wholesale prices tumbling from their 2022 peaks, and grid demand and coal output sent to record lows, according to the latest update from the Australian Energy Market Operator.
The latest Quarterly Energy Dynamics report published by AEMO on Monday, credits wind and solar for the 71 per cent fall in wholesale electricity prices from the same period last year, and particularly solar’s ability to wrest control of price setting from expensive fossil fuel generators in the middle of the day.
The only state where this wasn’t the case was – ironically – South Australia, which has the highest share of wind and solar of any state grid (more than 70 per cent). But extensive network shut-downs due to maintenance and upgrades meant it had to use more gas generation in the quarter, which kept prices higher than elsewhere.
Despite this, the number of negative price trading intervals hit a record high – more than 19 per cent of all trading intervals in the quarter across the National Electricity Market, highlighting the growing impact of wind and solar, the increased volatility in pricing, and the need for more storage to smooth out the prices.
The impact of solar was particularly visible in Queensland, where utility scale solar operations set the wholesale price of electricity on 72 per cent of trading intervals – almost always negative – and removing the pricing power of the coal fired generators during the day time hours.
Queensland saw a one-year drop of 71 per cent in average quarterly price from $228/MWh in Q3 2022 to $65/MWh, also below Q3 2021’s average of $80/MWh.
But rooftop solar also had a major impact across the grid. According to AEMO, the September quarter had the highest average distributed solar PV output for any third quarter at 2,287 MW, up 535 MW from the period a year earlier.
This helped push average operational demand to 21,270 MW, the lowest level since Tasmania joined the National Electricity Market in 2005. The 5.1 per cent fall in year-on-year operational demand was the largest such decrease for any quarter over the same period.
AEMO Executive General Manager Reform Delivery, Violette Mouchaileh, said that the growing influence of renewables in the NEM was apparent in the warmer September quarter as prices returned to historical levels.
“Record renewable generation output helped push down average wholesale electricity prices by more than two-thirds, double the occurrence of zero or negative wholesale prices (19%) and reduce total emissions by 11% compared to the previous September quarter,” Mouchaileh said in a statement.
She also noted a string of new records over the quarter – much of them already reported by RenewEconomy, although some of the numbers are different because AEMO works on 30-minute trading intervals rather than 5-minute intervals favoured by other data suppliers.
“Renewables also supplied a record 70% of total energy used over a half-hour period, with rooftop solar contributing 39%, again highlighting the likely benefit from coordinating rooftop solar and home batteries,” Mouchaileh said.
“Potential renewable output hit a record 98.6%, which combines dispatched generation and available wind and solar farms that were bidding above the spot price and therefore not dispatched into the wholesale market,” she noted. (Over a 5-minute trading interval, the peak in “potential renewables” reach more than 101 per cent).
Other records noted by AEMO included a new peak in rooftop solar output of 11.9 gigawatts (GW), and new maximums for grid-scale solar (5,949 MW) and wind (8,040 MW).
AEMO said 1.7 GW of new projects were progressing through registration in the quarter and 2.1 GW were commissioning to full output, compared to 2.4 GW a year ago. It said a further 10 GW of new projects were finalising contracts and under construction (pre-registration), up from 6.8 GW at the end of Q3 2022.
“The pipeline of new renewables, if supported by firming generation – batteries, hydro and gas – and transmission, will help meet reliability gaps and share low-cost, low-emissions energy to homes and businesses,” Mouchaileh said.
By region, South Australia recorded the highest average quarterly price at $92/MWh. This was followed by New South Wales and Queensland averaging $81/MWh and $65/MWh respectively, while Victoria and Tasmania recorded lower averages of $49/MWh and $29/MWh.
South Australia, as mentioned, was impacted by a number of outages on the main interconnector to Victoria, which left it more prey to high price bidding from the state’s gas generators, which is reflected in the relatively high “cap returns” component in the above graph, which reflects the number of prices above $300/MWh.
See also: South Australia potential wind and solar reaches record 264 pct of demand on Saturday
Federal energy minister Chris Bowen said the AEMO report shows unequivocally the substantial growth in cleaner, cheaper, more secure renewable energy like rooftop and large scale solar has helped cut wholesale electricity prices.
“It shows that the government’s coal and gas caps, that the LNP voted against, are protecting Australian households from the worst of the global energy crunch,” he said in an emailed statement.
“After ten years of denial and delay on renewable energy under the previous Liberal Government, AEMO’s report today outlines the danger to energy bills and reliability of further delays.
“Renewable energy is cheaper energy. The Government knows it. AEMO knows it. Peter Dutton and the Coalition still don’t get it.”
