Wholesale power prices triple as gas usage soars

Chris Bowen says energy ministers are united in securing supplies for Australians.

Chris Bowen says energy ministers are united in securing supplies for Australians. Photo: AAP

Renewable energy generation is setting new records in Australia, but bill shock looks set to continue for homes and industry as gas-fired electricity powers up.

National electricity market (NEM) wholesale electricity prices have tripled compared to a year ago, with record September quarter rates of $216 per megawatt-hour, the latest Quarterly Energy Dynamics report shows.

But that’s down from $264/MWh in the three months before, after the Australian Energy Market Operator (AEMO) intervened and the Victorian government imposed its own price cap.

As the economy restarts after the pandemic, rising energy demand is being met by gas-fired power plants and renewable sources – wind, hydro, solar farms and rooftop solar – with coal-fired generation in decline, the AEMO report shows.

An all-time instantaneous renewable generation record of 64.1 per cent was struck on September 18, and grid-scale solar and wind generation reached a new quarterly average record at 4465 megawatts.

But war in Europe, and price spikes for coal and gas, is firing up electricity prices in an Australian energy grid that’s still dependent on fossil fuels.

East coast gas prices have surged 142 per cent on a year earlier, averaging $26 per gigajoule over the quarter, but below $28.40/GJ in the three months to June.

Victoria’s gas production surged (up 11.6 petajoules, or 12 per cent), with Longford – which supplies 20 per cent of east coast gas – hitting a five-year record for the quarter.

Victoria’s gas supply to other jurisdictions is at its highest September quarter level in four years.

In WA, coal-fired generation fell by more than a third (down 36 per cent) and gas-fired generation soared almost two-thirds (61 per cent), with gas the primary fuel source throughout the quarter.

Signalling no respite for energy users, AEMO said market activity showed a generally higher cost of energy rather than short-term extreme prices driven by scarcity.

Northern hemisphere countries looking to build energy stockpiles before winter are pushing up prices for gas and coal.

Adding to fuel costs, floods in eastern Australia have stopped some rail-bound coal exports, AEMO said.

This week’s federal budget splashed $20 billion to build a grid that’s 82 per cent renewable energy by 2030, to cut power prices and emissions.

The budget also warned retail power prices are expected to rise by 56 per cent over the next two years, and gas prices will increase sharply – adding to producer and consumer inflation.

In a separate report on Thursday, the Australian Energy Market Commission (AEMC) warns more must be done to help communities cope with the scale of clean energy infrastructure to be built, and stop consumers footing the bill.

“When it comes to transmission, it’s critical the right balance is struck between the need to get the right projects while ensuring consumers don’t overpay because the wrong projects get built,” AEMC chair Anna Collyer said.

“Or because the costs of building the right projects have been under-egged,” she added.


Stay informed, daily
A FREE subscription to The New Daily arrives every morning and evening.
The New Daily is a trusted source of national news and information and is provided free for all Australians. Read our editorial charter
Copyright © 2024 The New Daily.
All rights reserved.