Wholesale electricity and gas prices increased during the April to June period but remained well below the unprecedented highs of 2022, according to the Australian Energy Regulator’s (AER) latest Wholesale Markets Quarterly Report.
The report shows that average spot prices in the National Electricity Market increased in the second quarter of 2023 compared to the preceding quarter.
This was driven by higher seasonal demand in southern states, the seasonal decline in solar generation, and reduced cheap coal capacity offered in Queensland and New South Wales.
While the exit of the Liddell power station in April contributed to higher prices in the quarter, it was partly offset by around 1,100 MW of new capacity in the form of solar, wind and batteries for the same period.
Wind output reached record levels in June, putting downward pressure on electricity prices and reflecting strong investment in renewable generation and favourable wind conditions.
East coast gas spot market prices averaged roughly $14.50 per GJ, with the increases caused mostly by high prices in May linked to supply constraints at the Longford gas plant and transportation constraints on the Moomba to Sydney pipeline during a period of high Victorian demand.
Despite these challenges, the Iona Gas Storage facility in Victoria finished the quarter at a record high level of capacity. This is important for the market’s capacity to manage the risks of peak-day shortfalls.
AER Board Member Mr Justin Oliver said the regulator was pleased to see prices remain well below the highs of the second quarter of 2022 as states face the remaining winter months.
“The second quarter of 2022 was an extremely challenging time for the sector. We’re pleased the factors that drove the high prices at that time weren’t present to nearly the same extent this year.
“We have seen far fewer coal generator outages and more coal capacity offered into the market than the same period last year. There are strong gas flows between states and high gas storage levels at the Iona facility, which is critical for managing supply-demand shocks,” Mr Oliver said.