The Australian Energy Market Operator (AEMO) has described the June quarter as an unparalleled period for the nation’s energy markets, with wholesale electricity and gas prices tripling in the National Electricity Market (NEM) compared with a year ago with outages at coal-fired power plants and soaring global fossil fuel costs combining to create “unprecedented” market disruptions.
The latest AEMO’s Quarterly Energy Dynamics (QED) report shows wholesale electricity spot prices averaged $264 per MWh in the NEM for Q2 2022, up by $177/MWh on the previous quarter and more than three times on Q2 2021’s $85/MWh average.
Wholesale gas prices averaged $28.40 per gigajoule (GJ) in east coast markets, compared to $8.20/GJ the same time 12 months ago, and almost triple the previous record of $10.74/GJ set in the September quarter last year.
The skyrocketing prices triggered the application of administered price caps, first in the gas markets and then in the NEM, and the first suspension of trading in Australia’s main grid since its creation in 1998.
AEMO executive Violette Mouchaileh said the three months to June had been one of the most “complex and challenging periods” in the market’s history and underscored the need to accelerate the transition to renewable energy generation, storage, transmission, and system services.
Mouchaileh blamed the soaring prices on “multiple factors”, including high global prices for fossil fuels, outages at coal-fired power plants, supply issues, and the coldest start to winter “in decades”.
“These factors also drove the frequency of NEM spot prices exceeding $100/MWh from 14% in Q2 2021 to 86% in Q2 2022, and above $300/MWh from 1% to 26%,” she said.
“What’s clear is the urgent need to build-out renewable energy with diversified firming generation, like batteries, hydro and gas, and transmission investment to provide homes and businesses with low-cost, reliable energy.”
AEMO said coal-fired generation outages reached highs of about 3.6 GW in late April and peaked in June at 4.6 GW.
Those outages, bidding changes and fuel supply constraints saw black coal generation’s average quarterly output down by 947 MW or 8.5% from Q2 2021 to its lowest Q2 output on record, its share of NEM supply falling 4.8 percentage points to 43%. Output from brown coal plants also continued to shrink, dropping 0.9 percentage points to make up 15.6% of supply while gas-fired generation overtook coal as the primary fuel towards the end of the quarter, rising 27% to 472 MW from Q2 2021 to its highest Q2 level since 2017.
Renewable energy continued to expand its share of the market. Output from grid-scale solar and wind increased 21%, or 664 MW, from a year earlier, driven by new capacity additions and commissioning.
Rooftop solar continued to grow with total installed capacity in the June quarter reaching 2,174 MW, 22% higher than the same period last year.
Overall renewable supply share for the quarter was 31.8%, up 3.7% on the same time last year.
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