Australia breaks renewable records however high fossil fuel prices trigger higher wholesale electricity prices

Feb 9, 2022 10:36 AM ET
  • Solar PV and also various other renewables accounted for a record share of electricity generation in Australia's National Energy Market (NEM) in Q4 2021 at 34.9%, while average wholesale prices rose with the higher cost of fossil fuels regardless of their share of the energy mix shrinking.
Australia breaks renewable records however high fossil fuel prices trigger higher wholesale electricity prices
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The trend was revealed in the Australian Energy Market Operator's (AEMO) Q4 2021 energy dynamics report last week (28 January), which likewise revealed zero or unfavorable place prices throughout the middle of the day many thanks partly to roof and utility-scale solar.

Clean energy in the NEM made up an average of 34.9% of generation across Q4, up from 31.6% in Q3, with a peak supply of 61.8% on 15 November, beating the previous record of 61.4% embeded in Q3 2021.

Record degrees of distributed solar, combined with less severe heat days and cooler temperature levels saw quarterly typical operational need fall to 19,876 MW, its cheapest Q4 standard because 2005, stated the report.

"The altering generation mix saw absolutely no or adverse area prices happening throughout 16.6% of all send off intervals throughout the quarter as well as an overall of 11.2% for 2021, greater than doubling 2020's average of 4.9%," stated AEMO exec basic manager of reform distribution, Violette Mouchaileh.

"Grid-scale solar, wind, hydro as well as roof solar PV continued to displace thermal generation, with black coal-fired generation falling to its cheapest Q4 standard given that 1998, while gas generation decreased to its least expensive Q4 average since 2003," Mouchaileh said.

Although renewables comprised a better share of the energy mix as well as electricity demand struck a record low in a number of Australian states as a result of a milder-than-usual end to the year, the greater cost of fossil fuels still triggered wholesale prices to increase.

In the southern NEM regions, such as Victoria, place prices fell or were steady. Nonetheless, the bigger share of fossil fuel-generated electricity in the states of Queensland and New South Wales, higher prices established by fossil fuel producers and also restrictions on transfers of reduced price energy contributed to an average AU$ 45/MWh (US$ 32/MWh) north-south price distinction, Mouchaileh discussed.

Queensland's price of AU$ 97/MWh was its highest possible Q4 average on record, more than double the degree last year, with price volatility in November and also December lifting the area's average by AU$ 27/MWh.

On the other hand, Victoria's quarterly typical price of AU$ 28/MWh was its lowest Q4 average considering that 2014, with negative ordinary place prices between 9:25 am and 2:20 pm (AEST), while the overall average in between 8am and 4:30 pm was simply AU$ 0.1/ MWh.

NEM landmass electricity prices balanced AU$ 57/MWh (US$ 40.6/ MWh) during the final quarter of 2021, which was listed below Q3's standard of AU$ 66/MWh but 31% higher than Q4 2020's AU$ 44/MWh.

Meanwhile, discharges from electricity generation was up to their most affordable quarterly overall on record at 28 million tonnes carbon dioxide equivalent, which was 8% less than the previous quarterly reduced set a year earlier, according to AEMO.

Offered the enhancing share of renewables in Australia's energy mix, and also the stress this puts on the nationwide grid, AEMO has actually required AU$ 156 million in financing over three years to 2025, a 66% rise on the previous period, to run the electricity market in Western Australia, according to the Australian Broadcasting Corporation.

The organisation's head, Daniel Westerman, has actually previously stated he desires the country's grids to be capable of managing 100% renewables by 2025.

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