Renewables Drive Electricity Market Shifts
Australia’s primary electricity grids underwent significant fluctuations in the first quarter, marked by a mix of record-breaking highs and lows in demand, unprecedented wind, solar, and battery generation, and a notable decrease in emissions.
Despite these positive developments, the absence of substantial shifts in wholesale electricity prices tempered the overall progress. While prices slightly decreased on the mainland, Tasmania saw an increase due to expensive hydro generation, along with high-priced bids from coal generators in other regions.
Rooftop Solar and Battery Storage Transforming Australia’s Grids
Rooftop solar panels and battery storage systems continue to drive substantial changes in Australia’s major electricity grids, impacting both the National Electricity Market (NEM) covering eastern states and South Australia, as well as the separate W.A. grid.
According to the Quarterly Energy Dynamics report by the Australian Energy Market Operator (AEMO), rooftop solar installations have had a profound effect on the grids, with an average output surge of 16 per cent to 3,782 megawatts in the first quarter.
Renewables Surge as Coal Plants Decline
Rooftop solar now dominates electricity generation during daylight hours, leading to new minimum demand records in NSW and Victoria. AEMO’s report highlights the diminishing role of baseload coal generation, with renewables accounting for 43 per cent of the energy mix in the March quarter, up from 39 per cent a year earlier.
Large-scale solar and wind power also saw significant increases in output, contributing to a reduction in emissions intensity by 4.4 per cent. This shift towards renewables pushed coal-fired generators to new lows in availability and output.
Wholesale Price Disparities Across Regions
Wholesale electricity prices remain higher in coal-dependent Queensland and NSW compared to Victoria and South Australia. Tasmania experienced notably higher prices due to hydro generation bids and limited solar capacity, resulting in a price disparity with mainland states.
The quarter saw an increase in negative pricing events, attributed to grid-scale solar and wind, while prices above $100/MWh were driven by coal and hydro generators demanding higher prices.
Overall, the first quarter showcased the ongoing transformation of Australia’s electricity grids, with renewables playing an increasingly significant role in the energy mix, reshaping the market dynamics and driving down emissions.
