The Australian Energy Regulator’s (AER) latest Wholesale Markets Quarterly report reveals a tale of two halves for wholesale energy prices over the July – September quarter.
While higher demand in the July and August winter months put upward pressure on prices, milder weather from late August onwards resulted in lower demand and helped to moderate prices in the quarter for some states.
However, electricity prices this quarter were heavily affected by a significant 54 high price periods. AER Board member Jarrod Ball said multiple factors impacted these high price periods and the quarter’s price outcomes.
“A combination of high demand, low wind and network outages during peak demand periods contributed to this volatility,” Mr Ball said.
Prices decreased in NSW (25%), VIC (9%) and TAS (12%), and increased in SA (35%) and QLD (5%) compared to the previous quarter, with prices in all regions higher than the same time last year.
“Importantly, forward wholesale electricity prices for 2025 declined slightly this quarter,” he said.
An additional 972 MW of capacity was offered into the National Electricity Market this quarter by wind, gas and batteries compared to the same time last year.
Significant amounts of new capacity also entered the market this quarter, with approximately 1,445 MW of capacity added through batteries (600 MW), wind (729 MW) and solar (116 MW). However, it will take some time before these units reach full output.
East coast downstream gas market spot prices decreased by 9% (to $12.51/GJ) compared to last quarter, with price reductions linked to periods of unseasonably warm weather in late July and August.
This warmer weather also resulted in average gas demand remaining low at 103 PJ, just a little above the same time last year when mild conditions saw third quarter residential and commercial gas demand fall to 10-year lows.
Pipeline flows south from QLD remained strong in July to meet demand in southern states, before reducing and then reversing and flowing north into QLD intermittently from late August when southern demand eased.
With the reduced risk of supply shortfalls and a lower potential need for market intervention, AEMO revoked its threat to system security notice on 23 August, which it had issued on 19 June.
“Although the Iona gas storage facility dropped to very low levels in July and August to meet the increased demand that comes with cold winter conditions, it’s pleasing to see that participants were able to refill and return it to normal levels over August and September when milder weather reduced demand,” Mr Ball said.
The AER will publish a report on the July – September high price periods in November.