Underlying electricity demand reached a record in the September quarter, yet wholesale prices fell 27 per cent as rooftop solar and batteries increasingly reshaped when power is generated, stored and used.
Australia’s main grid experienced record underlying demand over the September quarter, but the combined impact of more rooftop PV, home batteries, and utility-scale wind, solar and storage helped bring average wholesale electricity prices down to their lowest in five years.
The Australian Energy Market Operator (AEMO) says the growth of rooftop PV, and home and grid-scale batteries, continues to change the nature of the energy system, with the low prices coinciding with gas generation hitting its lowest level for Q3 since 2000.
Homes with solar and battery storage are now drawing 75 per cent less power from the grid in evening peaks than homes with solar and no batteries, and grid-scale batteries are now setting the price on nearly half of all intervals – as CEO Daniel Westerman flagged last week.
For the first time, according to AEMO’s latest Quarterly Energy Dynamics report, grid-scale batteries are supplying significantly more power in the evening peaks than gas-fired generation, and all this has the combined effect of lowering prices in those evening peaks.
“Electricity use continues to grow, but more solar and storage is changing when energy is produced, drawn from the grid and shifted across the day,” said Violette Mouchaileh, AEMO’s executive general manager policy and corporate affairs.
“Batteries continue to shift record amounts of renewable energy into the higher-demand evening period, when households and businesses typically need more power.”
AEMO says the increase in underlying demand (to an average of 25,472 megawatts) reflected ongoing electrification, higher industrial demand and increasing data centre consumption – mostly in Victoria – and came despite warmer winter conditions that reduced heating requirements.
However, operational demand on the grid actually fell, because of the increase in rooftop PV, which also added to the overall decline in average wholesale electricity prices across the National Electricity Market (NEM), which fell 27 per cent from the same period a year ago to $63/MWh, the lowest for this period since 2021.
Victoria and Tasmania had the lowest prices, averaging $56/MWh, with Queensland at $61/MWh, South Australia at $69/MWh, and New South Wales at $74/MWh.
The share of renewables continued to grow in the September quarter, to a record Q3 share of 44.3 per cent (up from 41.8 per cent a year ago), despite a six per cent decline in wind generation.
Grid-scale solar boosted average output by 30 per cent to a new Q3 high of 2,211 – boosted by the increase in battery storage that meant significantly less economic curtailment, and because middle-of-the-day prices are higher. Midday demand was also boosted by the impact of the Solar Sharer initiative, which offers free power in the middle of the day.
Hydro output also increased in the quarter, and a new record half-hour renewable penetration of 80.4 per cent was reached on 19 September.
One of the interesting developments was a reduction in negative priced events, because of the increase in battery charging, particularly in Queensland, where negative prices fell to 43 per cent of dispatch intervals, a fall of 30 basis points.
The magnitude of the negative prices where they occurred also fell, from an average of minus $16/MWh to minus $10/MWh, which also reflected the lower large-scale generation certificate prices, which halved from a year earlier to just $7/certificate.
Republished from Renew Economy
Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of the EV-focused The Driven. He is the co-host of the weekly Energy Insiders Podcast. Giles has been a journalist for 40 years and is a former business and deputy editor of the Australian Financial Review. You can find him on LinkedIn and on Twitter.