Electricity prices soar thanks to costly gas, coal outages and market manipulation
Most states experienced a significant jump in electricity prices in the June quarter, with record demand driven by cold weather, coal outages, and lower wind and hydro output.
These shortages increased the country's reliance on gas, its most expensive power technology.
Data shows that average prices across the NEM jumped by one quarter to $133 per MWh in the June quarter – the highest since the 2022 energy crisis.
The worst affected state was NSW, which plays host to the biggest grid and the largest fleet of coal fired power generators, which experienced a three fold increase in the number of “baseload” plant failures.
These were particularly bad in May, when network constraints and bidding behaviour by big utilities cashing in on the tight market saw prices repeatedly hit the market cap.
That bidding behaviour and market manipulation resulted in the market in NSW being suspended for the first time since 2022.
The bidding strategies are not illegal, it seems, but even the Australian Energy Regulator questioned whether the behaviour was in the best interests of consumers.
Without coal plant failures and bidding behaviour by the country’s 3 biggest energy retailers, the average price in NSW might have actually fallen in the June quarter, according to AEMO data.
But the NSW government has deepened its dependence on coal by agreeing to pay Origin Energy up to $450 million to keep the Eraring coal plant open.
Elsewhere in the main grid, a significant fall in wind generation – down 20% from last year - and a 16% fall in hydro output led to a big increase in more costly gas generation.
Labor's strategy calls for more renewables and storage to escape the shackles of the fossil fuel industry, expensive gas plants in particular.
The federal Coalition, on the other hand, wants to keep coal fired power stations open longer, slow down or stop the rollout of renewables, and use gas to fill gaps while they wait for nuclear plants to be built in the 2040s.
Critics say that will lock Australia in to two decades of much higher emissions, and much higher prices.
The list, compiled by energy analyst David Dixon at Rystad, shows that Iberdrola’s Avonlie solar farm in NSW was the best performing solar facility in the country during the month, achieving a capacity factor of 32.3 per cent.