Power producers chasing profits during a cold snap have stoked wholesale electricity price rises in recent months, according to the latest data.
Wholesale electricity prices have increased across all regions except Queensland as more expensive gas and hydro generation were supplied to meet demand, according to a market update released by the Australian Energy Regulator on Wednesday.
Average prices from April to June ranged from $109 per megawatt hour in Queensland to $189 MWh in NSW, where the price increased by more than a quarter (28 per cent) in a tight market with less sunshine.
“The impact of cold snaps, planned and unforeseen network outages, combined with rebidding and lower solar and wind output has pushed electricity prices higher than this time last year,” board member Jarrod Ball said.
The regulator said generator and network outages created the opportunity for some market participants to “profit maximise” and shift energy offers to higher price bands.
But any 30-minute price spikes above $5000 per MWh, which happened 19 times during the period – mostly from May 2 to 8 in NSW – sparks an investigation and publication of the findings.
The breaches triggered a temporary pricing cap and was the first declaration of administrative pricing since the winter of 2022.
In Victoria, cold weather increased demand and coincided with less wind and solar generation, leading to an increase of $96 per MWh (up 45 per cent).
Gas-fired electricity’s share surged 70 per cent to 1653MW, compared to the previous quarter, up 16 per cent from a year ago.
Releasing a separate report for the quarter, Australian Energy Market Operator CEO Daniel Westerman said flexible gas-powered generation was “the ultimate backstop” during periods of reduced renewable generation.
Low wind speeds and reduced rainfall in the southern regions led to decreases in electricity from wind (down 20 per cent) and hydro (down 18 per cent), he said.
Gas generation was up 16 per cent and coal rose seven per cent as Queensland’s black coal-fired generators fired up.
But Western Australia had warmer weather and a new March quarter renewable penetration record of 30.8 per cent, driven by a 49MW increase in small-scale solar and a 75MW rise in wind generation.
Higher renewable generation displaced gas-fired generation, which fell 134MW during the three months to June.
Average operational demand fell to 2000 MW, as WA’s rooftop solar more than offset the 24MW increase in underlying demand.
East coast wholesale gas prices averaged $13.66 per gigajoule for the quarter, down from $14.21GJ a year earlier.
Gas markets remain vulnerable to price shocks and supply shortfalls over winter, despite record supply flowing south from Queensland, the regulator said.
A system risk warning was issued on June 19 and will remain in place until September, as the market operator expects the supply of gas in all or part of the east coast may not meet demand.
Mr Ball said southern states would need to rely on Queensland and storage withdrawals to supplement local production.
Marion Rae
(Australian Associated Press)
