Wholesale electricity and gas prices in 2020 dropped to their lowest levels since 2015, according to the Australian Energy Regulator’s (AER) latest Wholesale Markets Quarterly Report.
The report, which looks at the 2020 calendar year with a particular focus on October to December 2020 (Q4), also reveals that there was more wind and large scale solar generation than ever before with a record 3,700 MW of renewable capacity entering the market.
AER Chair Clare Savage welcomed the lower prices, saying it was good news for customers with wholesale prices making up a third of household energy bills.
“We expect these sustained lower wholesale prices to be reflected in retail bills, so households and businesses should pay less for their energy,” Ms Savage said.
“We also saw significant changes in the generation fuel mix. Wind and large scale solar generators contributed a record 17 per cent of the total National Electricity Market (NEM) output in Q4, which contributed to lower wholesale prices.
“Record low demand due to mild weather and high levels of solar rooftop generation also contributed to lower wholesale prices in Q4, particularly in Victoria, South Australia and Tasmania.
“The lowest black coal generation output across the NEM since 2014 was recorded in Q4, with record low black coal generation output in New South Wales, mostly driven by planned generator outages.”
Other key report findings regarding wholesale electricity prices include:
- For the first time since 2015, annual prices were below $70 per per megawatt hour (MWh) in all regions.
- Average annual prices fell by up to 58 per cent, compared to 2019.
- Average quarterly prices in Q4 were generally low, ranging from $35 per MWh in South Australia to $71 per MWh in New South Wales.
Key report findings regarding east coast gas markets include:
- For the first time since 2015 annual average wholesale gas prices were below $6 per gigajoule (GJ) across all markets, falling by up to 43 per cent compared to 2019.
- Wholesale gas prices rose in Q4 across all domestic markets. But average east coast spot market prices in Q4 were $5.92 per GJ, similar to price levels in Q1 2020.
- Domestic price increases in Q4 followed a rise in Asian LNG spot prices, which led to Queensland exporting a record number of LNG cargoes.
- Domestic price rises in Q4 2020 were moderated by significant falls in gas powered generation demand, and increased Queensland production, compared to Q4 2019.
- East coast gas markets responded to heightened gas exports in Q4 with strong flows of gas north. Much of this was facilitated by the Day Ahead Auction for pipeline capacity.
|New South Wales||$71|
About the AER
The AER works to make all Australian energy consumers better off, now and in the future.
- We regulate electricity networks and covered gas pipelines, in all jurisdictions except Western Australia. We set the amount of revenue that network businesses can recover from customers for using these networks.
- We enforce the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. We monitor and report on the conduct of energy businesses and the effectiveness of competition.
- We protect the interests of household and small business consumers by enforcing the Retail Law. Our retail energy market functions cover New South Wales, South Australia, Tasmania, the ACT and Queensland.
- We drive effective competition where it is feasible and provide effective regulation where it is not. We equip consumers to participate effectively, including through our Energy Made Easy website, and protect those who are unable to safeguard their own interests. We use our expertise to inform debate about Australia’s energy future.