Wholesale electricity prices are trending lower in the first month of 2021 across all states, according to research from Cornwall Insight Australia, continuing on from the low-price outcomes seen in December 2020. As seen in its generation mix chart above, solar and wind have been accounting for more of the electricity mix, pushing down the contributions of fossil fuels as well as wholesale prices.
“At $23.73 in January 2021 for Victoria, it is, in fact, the lowest monthly average price since December 2012. Unsurprisingly, this price drop had a large impact on more expensive natural gas generation in Victoria,” Cornwall Insight Australia’s Modelling Consultant, George Wong, said.
“The largest decrease in natural gas generation percentage can be seen in Victoria, where it only accounted for 0.7% of the total generation in January 2021. In Victoria, the brown coal generation also saw a decrease in percentage share from 78.8% to 74.9%. In contrast, solar PV generation has increased from 1.5% to 2.9%, while wind generation increased from 11.2% to 16.3%.
“This is the same story for other states, with a low average monthly price driven by increased solar PV and wind generation. The consequence of which is a reduction in the share of fossil fuels in the generation mix.
“As noted by the QED, as the wholesale electricity price has fallen, out-of-market costs to keep the system secure have also increased, with SA particularly seeing a 91% increase in out-of-market costs when comparing 2020 with 2019. AEMO expects four upcoming synchronous condensers will curb this trend by the middle of the year.”
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