Australia Electricity Market (NEM) Q4 2018 – Demand & Wholesale Price

Australia NEM -Q4 2018

The electricity market of Australia is constantly shifting since the beginning of solar revolution. The contribution of renewables, peak demand, are now changing quarterly due to shifts in the market. In the last quarter of 2018, the country experienced weathers that are warmer than the previous 10 year average., except in some cities like Sydney.  Adelaide, Brisbane and Melbourne experienced high december temperatures. Despite this, the trend of decreasing NEM demand continued.

South Australia and Tasmania recorded the lowest energy demands at 599 MW (on 21st Oct 2018) and 868 MW respectively. There was a 4% decrease in average NEM demands in Victoria mainly due to 26% increase in rooftop installations and moderate weather conditions, which did not necessitate heating or cooling.

australia electricity market - average electricity price by region

Figure: Average Electricity Market Price By region

Wholesale Price in Electricity Market

On the other hand, wholesale electricity market prices were higher in Q4 in all regions.  These higher prices occurred despite the favourable demand patterns. As shown in the figure, the average electricity price (in $/MWh) throughout the states were its highest (compared to previous quarters) except for Tasmania. Some of the few factors for this hike may be lower GPG output, higher GPG price, outrages in coal power generation and higher cost of hydro power – Australia’s biggest contributor of renewable energy.

Price setting trends in NEM

Figure: Price Setting Factors in NEM

There are some other factors that contribute to these elevated market prices. The coal capacity of the country shranky by 4,000 MW between 2013 and 2017. Black coal generators and GPG, despite lower generation, set the majority of prices throughout the country. During the off-peak periods (22:00 to 07:00), black coal dominated. During peak periods, the prices were mainly dependant on Hydro and gas power. This explains the fact that Queensland’s average electricity cost was its highest in a year at $82/MWh. Black coal was the main generator here for more than 60% of the day time. In Queensland, Victoria and New South Wales, the frequent price setting coal power station were bayswater (10%), Gladstone (11%) and Stanwell (9%). The next part of this article will delve into the electricity generation trends and contribution of renewables in Q4 2018.


Note: This article is  from the AEMO’s Energy Dynamics Report. Image credit: Unsplash

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