The Australian Energy Regulator’s (AER) latest quarterly report shows the impact of coal price cap interventions and the effects of increases in large-scale and rooftop solar output on wholesale energy prices.
During the January to March 2023 period, wholesale energy prices stabilised and solar power generation set another record, according to the Australian Energy Regulator’s (AER) latest Wholesale Markets Quarterly Report.
The report shows that average National Electricity Market (NEM) prices over the first quarter were lower than the preceding quarter, attributed to greater supply of low-priced capacity offered into the market, particularly by black coal but also by gas and solar generators.
Comparisons to prices at the same time last year vary by region. Quarter 1 2023 prices were lower in Queensland, similar in Victoria but higher in New South Wales, South Australia and Tasmania. Heatwave conditions at different times during the quarter resulted in average prices being higher than they otherwise would have been.
Across the NEM, large-scale solar output achieved an all-time quarterly record and was up 22 per cent on a year earlier, accounting for nine per cent of the total generation mix in the quarter. Rooftop solar output also hit a new record. The increase in both large-scale and rooftop solar output contributed to downward pressure on daytime prices.
The report also shows that, after a slight increase in February, east coast gas spot market prices continued a downward trend and averaged below $12/GJ. Contributing to this was additional gas available through spot markets due to outages on Queensland Curtis LNG export train and reduced international price pressures.
Alongside lower gas prices, the Iona gas storage facility in Victoria was able to replenish its inventory to its highest-ever end of first quarter level.
AER Chair, Clare Savage, said the regulator is currently finalising the Default Market Offer (DMO) for the coming year.
“We continue to closely monitor electricity forward contract prices given their relationship to wholesale costs incurred by retailers and the impact it can have on the final DMO price,” Ms Savage said.
“Our latest quarterly wholesale report shows forward base futures prices for electricity initially stabilised during the early part of 2023, and despite an increase in March they remain well below levels observed in 2022.
“It also appears that the coal price cap interventions continue to place downward pressure on electricity prices, together with strong renewable output.
“At this stage, the late quarter increase in base futures prices does not appear to be having an impact on likely DMO outcomes but we will continue to monitor contract prices ahead of releasing our final DMO determination in May.”
The AER will release its final determination for the 2023–24 DMO by 26 May 2023.
