The Australian Energy Market Operator (AEMO)’s Quarterly Energy Dynamics report has highlighted the role of flexible gas-powered generation as a backstop for the National Electricity Market (NEM) during periods of reduced renewable generation during peak demand.
AEMO CEO Daniel Westerman said, “Colder weather has driven a new record for total electricity demand in the NEM for the June quarter.
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“On the east coast we have seen low temperatures and persistent cold snaps, especially in Victoria, which have driven higher morning peak demands through the tail end of autumn and the first month of winter.
“Extended periods of low wind have led to reduced wind generation output which was down 20% from last winter to a quarterly average of 2,657MW, with wind availability down to their lowest levels since Q2 2017,” he said.
Hydro generation—heavily concentrated in southern states—also generated less during the quarter, averaging 1,607MW—a reduction of 18% from last year and the lowest output for a Q2 since 2017.
“These market conditions highlight the important role that batteries, pumped hydro and flexible gas generation will play as renewable generation becomes more dominant in Australia’s electricity grids,” Westerman said.
“The role of batteries in supporting morning and evening demand peaks became more prominent, with average generation in those periods more than doubling since last year, reflecting the significant increase in battery capacity,” he said.
Quarterly wholesale prices averaged $133/MWh this quarter across the NEM, 23% higher than $108/MWh in Q2 2023. By state, year-on-year prices increased in NSW ($173/MWh), SA ($135/MWh), TAS ($131MWh) and VIC ($127/MWh). Queensland spot prices fell to $101/MWh, helped by increased black coal availability and less outages, leading to increased offers at prices below $0/MWh, particularly during the day.
In May, two days of price volatility in NSW, including major coal plant outages coinciding with planned transmission outages, contributed $45/MWh to quarterly wholesale prices.
East coast wholesale gas prices averaged $13.66 per gigajoule (GJ) for the quarter, lower than the $14.21/GJ in Q2 2023. Gas demand increased marginally, mostly driven by higher demand for gas-fired generation, up 18% from Q2 2023.
The quarter also saw AEMO notify the gas industry of a potential risk or threat to gas supply in parts of the east coast, due to the rapid decline in Iona underground gas storage inventory.
“These meetings enable AEMO to work with the industry to manage gas supplies across the east coast. They are important in the management of gas supply risks and support AEMO in keeping the market fully informed,” Westerman said.
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By contrast Western Australia’s Wholesale Electricity Market (WEM) has experienced relatively warmer weather this quarter, resulting in a new Q2 renewable penetration record of 30.8% thanks to a 49MW increase in small-scale solar and a 75MW rise in wind generation.
The higher renewable contribution displaced gas-fired generation, which decreased 134MW during Q2. As a result of higher rooftop solar generation, average operational demand for the quarter fell to 2,000MW, which was 28MW less than the same period in 2023.
