The AER’s wholesale markets quarterly report analyses trends in the electricity and gas wholesale markets, focusing on the most recent quarter, and alerts participants and stakeholders to issues of concern. The quarterly reports include discussion of prices, demand, generation, contracts, market outlook and new entry and exit. These reports are now more concise and made available sooner after the quarter’s end to address the need for timely market information, including reporting on the impact of the Federal Government’s Energy Price Relief Plan.
Insights - July to September 2024
Electricity
- Higher demand in July and early August put upward pressure on prices. Milder weather from late August onwards brought lower demand and more moderate prices.
- Q3 had a significant number (54) of high price periods, with South Australia accounting for half these (27). These periods predominantly occurred when demand was high, wind generation was low and there were network outages.
- While wind generation was 21% higher compared with the same period in 2023, variability in output in July and early August resulted in the need for more expensive firming resources such as batteries, hydro and gas‑powered generation (GPG).
- More electricity was offered into the market compared to the previous quarter, but at more variable prices and with a lower number of offers under $70/MWh. Hydro and GPG set the price significantly higher compared with the previous year.
- Previously delayed generation projects came online with significant new entry in Q3, made up of mostly wind and batteries. However, it will take some time before these units reach full output.
- Forward prices declined slightly suggesting the recent high price events have not flowed through to future prices. Prices for the relevant quarters are still higher than they were at the start of the year.
Gas
- Wholesale gas market prices were lower during Q3 compared to the previous quarter. However, prices were well above the same period of 2023, when relatively unhindered supply combined with historically low demand led prices to drop as low as $5 per GJ.
- There were fewer peak demand days for gas in Q3 compared to the previous quarter, with more stable prices from mid-August. While Iona storage dropped to very low levels during July, the facility started refilling over August and September when milder weather reduced demand. Storage levels remained far below the levels during the same period last year but above this time in 2022.
- Demand for gas‑powered generation (GPG) was lower compared to the previous quarter, as colder temperatures eased, and Tasmania was able to rely more on hydro generation. GPG demand reduced across mainland regions with a significant drop in September, particularly in Victoria.
- Longford production was more stable compared with the previous quarter and produced slightly below its full capacity in Q3. With the reduced risk of supply shortfalls and a lower potential need for market intervention, AEMO revoked the threat to system security notice on 23 August.
- Pipeline flows south remained strong in July to meet increased demand, reducing in August in line with reduced southern demand. From 24 August the flow reversed and began flowing intermittently north into Queensland.