Winter energy prices 2016

Wholesale energy prices in eastern and southern Australia were unusually high in the first two months of winter 2016. In June, reduced availability of low-priced coal generation capacity contributed to tighter supply and high electricity prices in mainland regions of the National Electricity Market, while a confluence of local factors raised South Australian prices in July.

Spot gas prices also rose from the third week of June 2016 in response to higher local demand (including for gas powered generation to meet the shortfall in coal plant capacity and for residential gas heating on colder days) and to meet LNG export obligations. Supply issues, including depleted gas storage levels and production outages also contributed to higher gas prices.

This communication highlights key drivers of high winter prices. We will publish more detailed reports covering three days on which electricity prices reached extreme levels, and separate reports on significant spot price variations in gas.

Segment: 
Issued date: 
24 August 2016
AER reference: 
AC 85/16