The Australian Energy Regulator (AER) has reported lower demand for energy and a fall in wholesale electricity and gas prices during the July to September quarter of 2023 in its latest Wholesale Markets Quarterly Report.
The report shows average wholesale electricity prices in the National Electricity Market (NEM) were less than half that seen at the same time last year due to mild winter weather, and in all regions except South Australia prices are similar to prices seen in the third quarter of 2021.
Electricity demand fell to its lowest ever level for a third quarter, averaging about five per cent lower than the same period last year. This was driven by mild weather conditions alongside record high rooftop solar output, which was 31 per cent higher than the same quarter last year.
Low demand, alongside increased low-price offers from generators, resulted in lower prices.
In east coast gas markets, those same mild conditions saw third quarter residential and commercial gas demand fall to ten-year lows, with domestic gas spot market prices averaging just above $10 per gigajoule – a 28 per cent decrease from the previous quarter and a 60 per cent decrease from the same period in 2022.
International liquid natural gas spot prices increased during the quarter and are trending upwards, in line with usual expectations when the Northern Hemisphere enters winter and heating demand rises.
However, the impact of the European winter on prices is likely to be mild compared to 2022 due to European storage levels reaching targets early in the season.
Closer to home, the Iona storage facility ended the quarter with record high storage levels which, with forecast gas surplus conditions, meaning market participants should be better placed to manage gas powered generator demand peaks over summer, should they materialise.
AER Board Member Jarrod Ball said the regulator is pleased to see prices in wholesale markets easing.
“Not only did we see energy prices and demand fall during the July to September period, but we also saw a number of quarterly records set for rooftop solar output, electricity demand and gas storage levels.
“The NEM also saw black coal contribute 45 per cent to total output, its lowest share on record.
“As the energy transition progresses it was pleasing to see two wind farms, two solar farms and two batteries commence generating during the quarter, and while they will add 800MW of capacity once fully commissioned, more is needed to keep pace with the planned coal plant retirements over the next decade,” Mr Ball said.
