South Australia – maligned by conservatives over the world-leading share of wind and solar in its grid – now boasts the cheapest wholesale electricity prices in the country, even as it reaches “world first” levels of 100 per cent solar power.
The Australian Energy Market Operator, in its latest Quarterly Energy Dynamics report, confirms that South Autralia – as first reported exclusively by RenewEconomy three months ago – served all of its electricity demand for more than an hour shortly after mid-day on October 11 through rooftop and utility scale solar.
AEMO says this is a world-first in a grid of this size, and occurred in a December quarter when South Australia posted the lowest wholesale electricity prices in the country – thanks to the growing share of wind and solar and the increase in rooftop solar PV which is reducing grid demand.
“South Australia’s quarterly average price fell 57 per cent to $29/MWh, representing its lowest average since Q2 2012,” AEMO says, adding that these continued price reductions “were largely a function of its lowest quarterly average demand on record, and increased wind and solar output in Victoria and South Australia (328 MW on average).”
This is important recognition for a state unfairly maligned by conservatives, and Australia’s federal Coalition government in particular, for its ground-breaking shift to wind and solar, which critics say had led to the highest electricity prices in the world.
But the truth is that South Australia has long suffered high electricity prices than other states, thanks to its former dependence on expensive gas and coal, and it began to search for cheaper renewable energy options as far back as the 1970s.
When wind and solar prices fell dramatically over the past decade it seized the moment, and is now reaping the rewards, so much so that the state Liberal government has set new goals for “net 100 per cent renewables” by 2030, and a 500 per cent renewable energy target by 2050 reflecting its desire to export clean energy to neighbouring states and overseas.
AEMO points out that the growth in wind and solar has allowed some states, for the first time, to break the nexus between gas prices and electricity prices. So while gas prices have been going up, mostly due to events in international markets, local electricity prices have been mostly falling, thanks to the increase in wind and solar.
South Australia also posted new record lows for what is termed “minimum operating demand” – the demand not served by the growing amounts of rooftop solar, as did Victoria.
Wind is now setting the wholesale price more often than before, and up to eight per cent of the time in South Australia, which also continues to experience the most “negative pricing” events – 17 per cent of the time in the last quarter, a situation worsened by increasing network constraints and transmission line outages.
In South Australia, this resulted in some gas generators trying to shut down to dodge the negative prices and being forced by AEMO to stay online, but this situation will be dramatically reduced over the coming year as new “synchronous condensers”, which do not burn fuel, will come on line and will reduce the need to have gas generators operating at times of high wind and solar output.
Across the main Australian grid, known as the National Electricity Market, AEMO says that increased coal-fired generator outages, coupled with low operational demand, and increased wind and solar shaped the NEM supply mix.
Average black coal-fired generation decreased by 707 MW over the same period a year earlier, reaching its lowest level since late 2014.
The decline in generation occurred mainly in New South Wales which fell to its lowest quarterly average on record; a function of increased outages – including for unit upgrades – low operational demand, and displacement by wind and solar.
Gas, touted as the essential “transition fuel” by the federal government, fell to its lowest Q4 output since 2005, mainly due to lower operational demand and displacement by wind, solar and hydro.
Grid solar generation reached a record quarterly high of 1,018 MW on average, surpassing the previous record set in Q4 2019 by 193 MW. This was mainly a result of new capacity entering the system over the last year as solar irradiation during the quarter was lower than Q4 2019.
Average wind generation was 2,441 MW, with the largest increase compared to Q4 2019 occurring in Victoria (+223 MW) followed by Queensland (+93 MW).