Wholesale markets quarterly - Q1 2021

Segment: 
Category: 
Quarterly report
Release date: 
17 May 2021

Overview

The AER's monitoring, regulation and enforcement roles help deliver affordable and reliable energy for Australian consumers. Our quarterly reports allow us to identify significant trends in the electricity and gas markets, and independently evaluate market developments as they emerge.

Key Findings

Electricity

  • Wholesale electricity spot prices were lower than expected, with volume weighted average Q1 2021 prices ranging from $27/MWh in Victoria to $53/MWh in South Australia. This was the first time any region has had a Q1 price as low as $27/MWh since 2012.
  • Low prices were the result of very low demand driven by a mild summer and increased rooftop solar generation.
  • Increased large-scale renewable generation also put downward pressure on prices.
  • Low demand and increased low cost wind, solar and brown coal generation displaced black coal and gas generation.  
  • Average black coal generation fell to its lowest ever Q1 level and average gas generation fell to its lowest Q1 level since 2005. In fact, average solar generation exceeded average gas generation for the first time.
  • The higher prices in South Australia were mainly driven by 2 high priced events caused by plant and network failures and limited imports from Victoria.

Gas

  • Average gas market prices were slightly up from last quarter ranging between $5.50/GJ to $6.40/GJ.
  • Northern market prices remained higher again this quarter, with the north-south price gap widening further.
  • Significant quantities of gas continued flowing north into Queensland. 
  • The Day Ahead Auction remained popular with 9.9 PJ of capacity won across all auction facilities. 
  • Roma production and LNG exports remained high following record levels across Q4 2020.
  • Liquidity in the east coast spot markets continue to increase, reaching a record of 17% of scheduled demand this quarter.