The Australian Energy Regulator’s latest Wholesale Markets Quarterly Report reveals that wholesale electricity and gas prices increased compared to the preceding quarter.
In a trend consistent with previous years, the end of warmer months saw wholesale electricity prices increase between $65 per MWh (SA) and $87 per MWh (NSW), and the price in QLD decrease by $29 per MWh compared to the previous quarter.
This quarter saw electricity demand and price increases across all regions except for QLD compared to the same time last year.
AER Board member Jarrod Ball said both seasonal weather patterns and tight market conditions contributed to prices during the quarter.
“While we would expect to see wholesale prices rise as weather in southern states cools and demand rises to keep people warm, the combined impact of cold snaps, planned and unforeseen network outages, combined with rebidding and lower solar and wind output has pushed electricity prices higher than this time last year," Mr Ball said.
Decreased solar generation as the days get shorter is typical for the second quarter of the year. However, wind generation this quarter contributed 12% of total NEM generation, its lowest share for any quarter since Q2 2021 when it contributed 11% of total generation.
To compensate, higher-priced gas and hydro generation both increased this quarter, with gas-powered generation (GPG) rising by 70% (from 973 MW to 1,653 MW) compared to the previous quarter and 16% (from 1,420 MW) on this time last year.
There were also 19 high price events during the quarter, seven less than the last quarter but three more than the same period in 2023. Of these, 15 occurred in NSW across May 7–8.
This led to the cumulative price exceeding the cumulative price threshold in energy for only the second time in the history of the NEM and triggered an administered pricing period from May 8 to May 15.
These events contributed around $55 per MWh to NSW’s price increase from the last quarter. The high prices were driven by a variety of factors including generator and network outages, and some market participants rebidding part of their capacity from low to high prices. The AER published a separate report into these events and will provide further analysis in its Wholesale Energy Markets Performance Report in December.
Similar to movements in electricity prices, high residential and GPG demand days in May and June, coinciding with lower than forecast production at the Longford gas plant, caused east coast downstream gas market spot prices to rise to an average price of $13.76 per GJ – 18.8% higher than the previous quarter.
This average price increase for gas spot markets between the first and second quarter of the year is consistent with winter price spikes observed since 2021, however conditions this year led to the high rate of withdrawals from southern gas storage inventories, including the Iona facility.
In response, AEMO issued a system threat or shock notice on 19 June (to be in place until the end of September) but has not yet been required to intervene in the market.
“Southern states remain susceptible to demand and supply shocks during winter and will need to rely on continued gas flows from Queensland and withdrawals from the Iona storage facility to supplement southern production sources and meet demand,” Mr Ball said.
Average forward prices for electricity for the 2025 calendar year increased in all regions, ranging from $24 per MWh (QLD) to $41 per MWh (SA), indicating an expectation of higher spot prices going forward.
One new wind generator in South Australia entered the market this quarter and will be able to contribute up to 201 MW when fully commissioned. An increase in new generation is expected during the rest of 2024 and first half of 2025.