AceBusinessDesk – Consumers are being warned not to expect any immediate relief in their bills despite wholesale power prices falling to their lowest levels in two years.

Ace Press News From Cutting Room Floor: Published: Oct.24: 2023: ABC News: TELEGRAM Ace Daily News Link https://t.me/+PuI36tlDsM7GpOJe

A new report from the body that runs Australia’s biggest electricity market shows average wholesale prices slumped 41 per cent to $63 a megawatt hour in the three months to September 30 compared with the previous quarter.

Prices were down a whopping 71 per cent on the same period last year when Australia was still in the grips of an unprecedented energy crisis.

There were big differences across the states, with South Australia recording prices at $92 a megawatt hour and Tasmania the lowest at $29 a megawatt hour.

In Western Australia, which is not connected to Australia’s main grid, prices fell from their record earlier this year but were still the highest in the country at $99 a megawatt hour.

Helping to drive the sharp fall in the eastern states was record renewable energy output, which made up almost 40 per cent of supply in the period and pushed coal-fired generation to record low levels.

Negative prices, new records

Australian Energy Market Operator’s emerging markets and services executive general manager Violette Mouchaileh said a number of records tumbled during the quarter as relatively benign weather kept demand for electricity soft.

Among the records was the amount of time wholesale electricity prices dipped below zero, meaning generators were paying for the right to produce electricity.

Ms Mouchaileh said the number of five-minute trading intervals in which prices were “negative” more than doubled to 19 per cent compared with a year earlier.

The ever-growing amount of rooftop solar in the electricity system was also on full display.

AEMO noted so-called operational or grid demand – which strips out the demand that households with solar are meeting themselves – fell to new lows.

On top of this, instantaneous renewable energy generation reached a new record high share of total output for a brief period on September 21.

“ Renewables also supplied a record 70 per cent of total energy used over a half-hour period, with rooftop solar contributing 39 per cent, again highlighting the likely benefit from coordinating rooftop solar and home batteries,” Ms Mouchaileh said.

“The pipeline of new renewables, if supported by firming generation – batteries, hydro and gas – and transmission, will help meet reliability gaps and share low-cost, low-emissions energy to homes and businesses.”

Coal declining but still dominant

Head of the Energy Policy Centre at Victoria University Bruce Mountain said the report showed how the fortunes of coal-fired power and renewable energy were clearly diverging.

Coal-fired generation in the national electricity market, which covers most of Australia’s eastern seaboard, dipped to its lowest level since trading started in 1998.

Despite this, he said Australia’s power system was still heavily reliant on and exposed to fossil fuels and their prices.

He said this was likely to remain the case for some time, especially as the energy transition slowed.

“I think the big factors that explain the change is international traded coal prices have declined greatly from their peaks,” Professor Mountain said.

“They’re around a third of the level they were at their peak.

“ And our short-term gas price, although not plumbing the lows it once was at, is half the level at its peak.

“Gas and coal essentially determine the prices when wind and solar are not dominant, and they have the biggest effect on peak and average prices.”

According to Professor Mountain, the reduction in wholesale power prices was also unlikely to give hard-pressed consumers any immediate relief from the pain experienced over the past 18 months.

Little relief in sight for users

Benchmark electricity prices have soared almost 50 per cent on average since July last year as power providers sought to pass on the costs associated with an unprecedented energy crisis.

Professor Mountain said while some consumers would be able to take advantage of some discounts appearing in the market, many others would not.

He said this was because many consumers were unable or unwilling to switch providers.

What’s more, electricity services were often supplied via fixed contracts that could last for years at a time.

Although these contracts shielded consumers from volatility and rising prices in wholesale markets, he said they also lumbered them with higher costs when spot markets fell.

As such, he predicted the country’s bigger electricity providers, which were both generators of power and retailers to households, would be able to pad out their profits.

“There’s a big gap between what’s known as the spot market, which is the prompt market … and prices that customers experience,” he said.

“Most of the electricity sold to customers faces a price that has swapped the variable exposure in the spot market for a fixed price in the same way that most households will swap variable interest rates for fixed ones for varying periods of time.

“And so … there’s a lag between the change in spot prices and the change in the prices that customers see.”

Editor says …Sterling Publishing & Media Service Agency is not responsible for the content of external site or from any reports, posts or links and thanks for following as always appreciate every like, reblog or retweet and comment thank you