Wholesale electricity and gas prices across the National Electricity Market (NEM) continue to remain at their lowest levels in years.
Data from the Australian Energy Market Operator (AEMO) shows that wholesale electricity prices across the NEM averaged just over $44 per megawatt hour across the NEM in the December quarter. That is more than 38 per cent lower than the same quarter in 2019, over 50 per cent lower than in 2018, and the lowest December quarter wholesale price since 2014.
In its latest Quarterly Energy Dynamics report AEMO also highlighted that some regions experienced even more dramatic price falls, with prices in South Australia dropping to 57 per cent to $29 per MWh.
Wholesale gas prices continued to remain low in all regions, ranging between $5.52 and $6.28 per petajoule. This is the lowest December-quarter price in all regions in the five years since December 2015, and up to 43 per cent lower than two years ago, depending on the region.
The report also shows variable renewable output continued to increase to reach a record high of 3,459 MW, and accounting for 17 per cent of the supply mix, up from 13.5 per cent in Q4 2019.
However, AEMO’s findings also highlight that with increasing variable renewables, there is increasing reliance on firm generation to maintain reliability and keep our grid secure.
Costs for frequency control services increased by 160 per cent across the year to reach $356 million for 2020, while costs for AEMO directing gas generators to support system strength in South Australia increased by nearly 90 per cent in 2020 to reach $49 million.
New Consumer Price Index data released this week by the Australian Bureau of Statistics (ABS) also shows that retail electricity and gas prices are falling.
Household electricity prices across Australia fell by 9.2 per cent in the December quarter of 2020 compared to the same period in 2019.
This represents the eighth consecutive quarter of year-on-year retail electricity price falls across Australia since December 2018.
Prices dropped in most capital cities compared to the same time last year, falling 2.9 per cent in Sydney, 8.5 per cent in Brisbane, 6.5 per cent in Adelaide, 1.6 per cent in Hobart, 2.6 per cent in Canberra.
ABS data also shows prices for gas and other household fuels dropped by 2.6 per cent on the December quarter in 2019. These gas price falls were seen in most capital cities, falling 6.4 per cent in Sydney, 2.7 per cent in Melbourne, 2.4 per cent in Brisbane, and 4.9 per cent in Hobart.
Minister for Energy and Emissions Reduction Angus Taylor said the reports confirmed that the Government’s ongoing efforts to deliver secure and stable electricity and gas supplies and to keep energy prices as low as possible were yielding results.
“Report after report confirm energy prices are falling under the Morrison Government, and this is good news at a time when all Australians are working to recover from a challenging 2020,” Minister Taylor said.
“But we can’t be complacent. Increasing costs associated with need for AEMO to issue market directions and growing reliance on reliability services underscores the need for balance in our generation sources, to make sure the lights can stay on when the sun isn’t shining and the wind isn’t blowing.
“This is why it is important for all governments to work together to deliver the post-2025 market design needed to address risks to reliability, security and affordability, as more intermittent generation enters the system, technologies change and exiting thermal generators retire.
“In 2021, the Morrison Government will continue to get on with the job of securing affordable, reliable power for Australians, and ensuring the interests of customers are put first.”