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Solar panels, cooler summer drive power prices into negative territory in South Australia

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South Australia’s high uptake of renewables has led to another national energy milestone, with record low daytime wholesale prices in the first three months of the year.

The Australian Energy Market Operator (AEMO) has released its latest quarterly report, which also found that negative spot prices reduced South Australia’s average quarterly price by $10 per megawatt-hour.

For the first time, the average cost of power per megawatt-hour during the 10:00am–3:30pm off-peak was regularly into negative territory in South Australia, at negative $12.

Wholesale prices reflect the price of power paid by electricity retailers to generators, and eventually have an impact on household bills.

“National Energy Market (NEM) quarterly average wholesale electricity prices fell sharply compared to recent first quarters,” the report stated.

 

Key points:

  • Daytime wholesale prices were consistently in negative territory in SA
  • That was driven by renewable energy, but gas generators were needed to help stabilise the grid
  • Wholesale prices across the country dropped in the March quarter

 

“This represents the first quarter – anywhere in the NEM – when the daytime average has fallen below zero on a consistent basis.”

Wholesale prices across the country fell, helped by a milder summer and increasing amounts of renewable energy generation.

 

South Australia’s energy mix includes significant generation from rooftop solar.

 

Despite prolonged periods of negative spot prices in Victoria, there was less trickle-through impact on average quarterly prices in that state.

According to AEMO, the biggest drivers of negative prices were high output from renewables and low daytime demand.

The reduction in South Australia’s wholesale prices came despite a small fire at the Torrens Island power station in March which caused a brief but significant surge in trading prices.

 

There was a fire at the Torrens Island power station in March.(ABC News)

 

The fire limited energy export capacity and contributed $14 per megawatt-hour to the quarterly average of $41.

“This sudden drop in gas-powered generation (GPG) output and availability, coupled with restricted transfers on the Heywood Interconnector, as well as low wind and solar output, contributed to the trading price spiking above $5,000/MWh for three hours,” the report said.

With the output of the Barket Inlet and Torrens Island power stations reduced as a result of the fire on March 12, batteries stepped in to dispatch power.

 

 

South Australia has been at the forefront of solar uptake, but the growth of renewable energy sources in South Australia has placed pressure on gas-powered generators to stabilise the grid.

“Persistently low electricity prices below their cost of generation required AEMO to direct South Australian gas-powered generations on for system security for a record 70 per cent of the quarter,” chief markets officer Violette Mouchaileh said.

 

Violette Mouchaileh says gas generators have had to stabilise the system. (AEMO)

 

Big generators are compensated when the cost of generation is greater than the price being offered by the market.

On Tuesday, the Australian Energy Regulator slashed the Default Market Offer (DMO) for customers in states, including South Australia.

The DMO is “the maximum price an electricity retailer can charge a standing offer customer each year” and is intended to protect consumers from price gouging.

In South Australia, the DMO will be cut by $116 for the upcoming financial year.

 

 

Source ABC

April 28, 2021

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