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New UserAustralian wholesale energy prices in June quarter tripled from last year, market operator says
29 Jul 2022
Australian
wholesale energy prices in June quarter tripled from last year, market operator
says
Aemo executive says need for
renewables is ‘urgent’ as failing coal-fired power plants and global gas costs
cause prices to surge
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Wholesale
electricity and gas prices tripled in Australia’s main grid in the June quarter
compared with a year ago, as failing coal-fired power plants and soaring global
gas costs combined to create “unprecedented” market disruptions, the Australian Energy Market Operator said.
Aemo’s quarterly
market dynamics report found average spot prices for electricity in the
national electricity market, which serves eastern Australia, averaged $264 per
megawatt-hour across the quarter. That’s more than double the previous high of
$130 in the first quarter of 2019 amid droughts and heatwaves, and a little
more than three times the average price in the June quarter of 2021, which was
$85.
Violette Mouchaileh,
executive general manager at Aemo, blamed the price surge on high global prices
for fossil fuels, outages at coal-fired power plants, supply issues, and the deepest cold snap to start a winter “in decades”.
“What’s clear is
the urgent need to build out renewable energy with diversified firming
generation – like batteries, hydro and gas – and transmission investment to
provide homes and businesses with low-cost, reliable energy,” Mouchaileh said.
The spike in
prices has already partly been passed on to households and consumers through
their retail bills, but more imposts are to come.
The activation of
a payment system to reward companies for reducing energy demand – known as the
Reliability and Emergency Reserve Trader – cost about $86m. Compensation costs
for losses incurred after authorities ordered power generators back into the
market and during the market suspension in June “cannot yet be estimated as
claims are still being received and assessed,” Aemo said.
Another measure of
the struggle to meet demand during the quarter was the record number of
so-called “lack of reserve” conditions declared by Aemo. These rose to 406
separate events – or more than four on average a day – during the three-month
period, compared with 36 in the first quarter of this year and 73 in the June
quarter of 2021.