Negative pricing events hit record levels as solar takes big bite out of coal

Negative pricing events hit record levels in Queensland and South Australia in the September quarter, leading to a big drop in overall prices in those states and as rooftop solar continued to take a big bite out of the share of coal fired generation.

In its latest Quarterly Energy Dynamics report, the Australian Energy Market Operator says that South Australia experienced negative prices for a record 8.4 per cent of the time in the three months to the end of September. Queensland experienced negative prices 4.5 per cent of the time, compared to 0.1 per cent in the same period a year earlier.

The negative pricing events mark the changing shape of the Australian grid, which saw a number of new benchmarks during the quarter, including record outputs of wind and solar, and record low outputs of brown and black coal generation.

The negative spot prices lowered the average wholeasle prices of electricity in South Australia by $8.22/MWh, and by $2.74 in Queensland. The negative pricing events have continued into October and November, and South Australia has recorded the lowest prices in the main grid in that time.

Negative spot prices are not new – they used to happen regularly when in the past because coal generators could not switch off at night – but the number has increased dramatically with the growing share of wind and solar and the number of “network constraints”.

AEMO says two thirds of the negative prices in South Australia were caused by constraints that limited the capacity of the main link to Victoria, while constraints on the link from Queensland to NSW also limited exports from that state.

Still, the number of negative pricing events might have been lower but some of the country’s biggest “batteries”, such as the Wivenhoe pumped hydro facility in Queensland, were little used.

AEMO says it charged, or pumped water, on just 18 per cent of the negative pricing events in the quarter. It blamed a “combination of environmental, technical and commercial considerations” for this behaviour. That may change now that Wivenhoe is now owned and operated by the newly formed CleanCo, and no longer by a company seeking to protect its coal revenues.

AEMO says the latest negative spot price periods are also due to low operational demand and interconnector constraints, which restricted electricity exports.

One of the consequences of the negative spot prices is that some renewable generators have had to “rebid” to avoid having to pay to generate.

RenewEconomy has highlighted this phenomenon in both South Australia – see This solar farm has to switch off every second day due to negative prices  and Queensland, where solar farms switched off en masse in August.

AEMO says the curtailment of wind and solar almost doubled in the third quarter to a record 4.5 per cent from 2 per cent in the previous three months.

The curtailment was mostly driven by network and other constraints (dark purple in graph above) and only one quarter of it from negative pricing. The yellow represents the constraints on five solar farms in Victoria and NSW due to newly discovered “system strength” issues which has halved their output.

Nevertheless, the amount of grid scale wind and solar hit a record level of more than 30% of operational demand for the first time in the main grid on August 24.

It was one of a number of wind and solar records achieved during the quarter, including highest wind and solar output of 5,896MW on August 9, highest wind output of 4,738MW on August 10, and highest large scale solar output of 2,210MW on September 28.

And behind the meter, solar was also having an impact, pushing “operational” grid demand in South Australia down to record lows, and trimming an average 700MW from midday demand and an average of more than 300MW during the quarter.

• This graph above shows that Queensland has the biggest impact from rooftop solar (red), followed by NSW (orange). South Australia has a relatively small amount but this figures shows only reductions in demand, and includes increased heating demand over the period, while Tasmania (grey) suffered a reduction in demand due to reduced industrial load.

AEMO estimates that rooftop solar PV reduced operational demand by a further 78MW in Queensland, by 82MW in NSW and 29MW in Victoria.