A quarter of records AER’s wholesale report confirms market transition well underway

The national electricity market’s transition to one that increasingly relies on renewable energy is well underway with the latest quarterly figures (Q3 2021) from the Australian Energy Regulator’s (AER) Wholesale Markets Quarterly revealing a number of new records.

Records broken between July and September (Q3) include:

  • record rooftop solar output in every region, and a 26% increase in total rooftop solar generation compared to the same time last year,
  • record levels of wind generation in every region, meeting 14% of total National Electricity Market (NEM) demand,
  • record minimum black coal generation for Q3 (first time it fell below 50% of total output during the Q3 months),
  • record number of negative prices in every region,
  • record minimum Q3 demand for electricity generation in Victoria,
  • South Australia had its lowest minimum demand ever recorded, but also hit a Q3 record for maximum demand.

Tasmania again had the lowest average quarterly wholesale price at $27/MWh, the lowest in any region of the National Electricity Market (NEM) since 2012.

Queensland had the highest quarterly average at $90/MWh, followed by New South Wales ($88/MWh), Victoria ($64/MWh) and South Australia ($63/MWh).

The quarter featured a record number of negatively priced trading intervals, occurring three times more than in the previous quarter and nearly four times the amount in that same period last year, reflecting the impact of record rooftop solar output in every region. Prices were negative 25% of the time in South Australian and 20% of the time in Victoria.

In Victoria, minimum demand from the grid hit a record quarterly low of 2,631 MW while South Australia hit an all-time low of 265 MW.

The cost of maintaining system frequency through contingency Frequency Control Ancillary Services (FCAS) remained high, reaching a Q3 record of $130 million, with local Queensland costs of $71 million being the main driver of this result.

AER Chair Clare Savage said the quarterly results provided stark evidence of the pace of market transition

“These up-and-down results tell the story of a changing market,” Ms Savage said.

“The mix of generation continues to swing towards renewables with almost 1200 megawatts of new wind, battery and solar capacity entering the market in July, August and September.

“We expect more quarterly records to be broken as levels of renewable penetration increase in the NEM.”

Growing maturity in gas markets

The gas markets experienced unprecedented domestic and international daily price spikes, due to colder July temperatures, supply outages in Victoria, and higher global demand.

Prices jumped above $20/GJ early in July, but in the face of high global prices, they retreated and remained relatively low for the rest of the quarter, averaging between $6.70/GJ and $10/GJ in August and September.

Domestic gas production was at an all-time high and international demand for Australia’s liquified natural gas remains strong with results showing a Q3 record for export volumes.

Ms Savage said increased participation in the spot markets and day ahead auctions indicated a growing maturity of the gas markets.

“Interlinkages between gas and electricity markets also appear to be increasing, with higher prices paid intermittently for auction capacity this quarter, up to a record $1.70/GJ on pipeline routes servicing gas-powered generators,” she said.

The Q3 Wholesale Markets Quarterly includes a special analysis on competition in the gas spot markets, as well as an overview of the introduction of five-minute settlements in the national electricity market.

Issued date: 
17 November 2021
AER reference: 
NR 36/21
AER Media 0466 409 921 media@aer.gov.au