Coal cap, record solar stabilise wholesale power prices
20 Apr 2023
The regulator expects no repeat of
last year's wholesale energy price spike as record solar generation and
controls on coal stabilise prices.
But the closure of AGL Energy's
Liddell coal-fired power plant station will remove significant dispatchable
capacity from the national electricity market, the Australian Energy Regulator
(AER) warned.
AGL has begun the shutdown of
Liddell's three remaining generation units - one this week, with the others
scheduled for next week.
"This will tighten the
supply-demand balance, especially in evening periods when solar output is
low," the AER said in a quarterly report.
The Liddell power station site in
the NSW Upper Hunter will become an industrial hub, including a
commercial-scale battery to be built on the site, after more than 50 years of
generating electricity into the national grid.
The AER report released on
Thursday showed wholesale energy prices stabilised and solar power generation
set another record during the January to March period.
But heatwave conditions resulted
in average prices being higher than they otherwise would have been.
Across the market, grid-scale
solar output achieved a quarterly record and accounted for nine per cent of the
total generation mix.
Large-scale solar output increased
11 per cent from its record high at the end of 2022, reflecting strong
investment in solar generation.
Rooftop solar output also hit a
record, as households cut bills and emissions, and contributed to downward
pressure on daytime prices.
"Forward base futures prices
for electricity initially stabilised during the early part of 2023, and despite
an increase in March they remain well below levels observed in 2022," AER
chair Clare Savage said.
"It also appears that the
coal price cap interventions continue to place downward pressure on electricity
prices, together with strong renewable output."
Helping to ease an anticipated
tight gas supply this winter, southern gas storage refilled to its highest
end-of-March-quarter level since reporting began.
East coast gas spot market prices
continued a downward trend, after a brief increase in February, and averaged
less than $12 per gigajoule as international prices ease.
Asian liquefied natural gas prices
more than halved compared with the December quarter, to less than $20/GJ.
While gas generation increased
during the quarter, it has remained at overall lower levels than in recent
years, the report said.
Coal generators in NSW and
Queensland offered more total capacity, most of which was offered at lower
prices, as coal output rose.
The regulator's Default Market
Offer for 2023/24, which controls what energy companies can charge customers,
will be released by May 26.
Australian Associated Press