The AER's monitoring, regulation and enforcement roles help deliver affordable and reliable energy for Australian consumers. Our quarterly reports allow us to identify significant trends in the electricity and gas markets, and independently evaluate market developments as they emerge.
Key findings
Electricity
- Volume weighted average (VWA) annual prices rose in Queensland (QLD), New South Wales (NSW) and South Australia but fell in Victoria and Tasmania. It was the second highest annual average price on record for Queensland.
- Quarterly VWA prices displayed similar trends. The average Q4 2021 prices in Queensland of $111/MWh were the highest Q4 prices on record for Queensland. These prices were almost double the levels of Q4 prices of any other region.
- All the high prices in Queensland in 2021 followed the Callide C incident and were also driven by network constraints which limited the ability to import electricity from NSW.
- Demand in Victoria and South Australia fell below previous minimum records multiple times during the quarter, reflecting mild temperatures and output from rooftop solar.
- Generation from rooftop solar reached a record high in December. It output was just below the record maximum demand ever recorded in Queensland.
- Total output across the NEM fell for the fifth year in a row, falling to its lowest level since 2005, when Tasmania joined the market. Average renewable generation reached 25% of total output, while black coal and gas generation fell to record low annual levels.
- Frequency Control Ancillary Services (FCAS) costs were at a record high this year totalling $438 million. These costs were primarily driven by the network upgrades on the QNI interconnector.
- Queensland FCAS costs are the subject of our electricity focus story this quarter.
Gas
- Annual prices increased by 80% in 2021.
- Domestic Q4 prices averaged $10.5/GJ, markedly lower than Asian netback prices of $32.35/GJ.
- Gas production remained high at its second highest level for Q4 5,382 TJ/day
- Record Liquified Natural Gas (LNG) exports from QLD were reached in 2021.
- Day ahead auction for pipeline capacity to support south and north flows across Q4.
- Northern storage continued to decline and southern storage declined also providing critical southern market supply.