July and the preceding June were the most tumultuous months in the history of Australia’s energy markets. This quarterly report examines what happened to wholesale gas and electricity prices in the months that followed.
Warmer weather in August and September reduced demand and substantially eased prices. However, prices remain high by historical levels.
Additional domestic gas supply eased pressure on prices, delinking them from soaring international gas prices. Increased wind and solar generation, fewer baseload outages, improved fuel supply and lower gas prices, contributed to lower prices in the electricity markets.
High international energy prices will continue to put pressure on domestic prices. Forward markets continue to indicate high domestic gas and electricity wholesale prices will continue into 2023 and 2024.
- Gas and electricity prices halved in August from record July levels but remained historically high.
- Q3 2022 gas prices averaged around $26/GJ. Average quarterly electricity prices were the second highest on record and double previous Q3 records, ranging from $210/MWh in Tasmania to $257/MWh in South Australia.
- The key driver of lower prices in August and September was warmer weather and lower demand.
- Reduced demand combined with gas supply from LNG producers on planned maintenance eased pressure on gas prices.
- Increased wind and solar output, less black coal outages and reduced fuel supply problems, reduced the need for expensive gas-powered generation in the NEM.
- Black coal generators started rebuilding depleted stockpiles, however, some are still managing wet mines and stockpiles.
- Low gas storage levels coming out of winter also started to be replenished. Iona storage levels, in particular, were critically low.
- While private investment in new electricity capacity slowed over 2022, there are many new batteries in the pipeline.