Mild summer temperatures, coupled with record installations of rooftop solar capacity in the first three months of the year, has led to a 3% decline in average operational demand from the National Electricity Market (NEM), the Australian Energy Market Operator said in its new Quarterly Energy Dynamics report. The decline amounted to the lowest level of operational demand since 2002.
In fact, the first quarter saw record low average operational demand in most of the regions in the NEM, in Victoria, New South Wales and South Australia.
Spot prices plunge
Regional electricity spot prices fell massively, between 21% and 68% compared to the first quarter of 2020, to reach their lowest average level since 2015. The largest spot price reductions occurred in Victoria, falling from AUD 79 (USD 61.17)/MWh to AUD 25/MWh, its lowest quarterly average since the first quarter of 2012. New South Wales fell from AUD 86/MWh to an average of AUD 38/MWh, while Queensland averaged AUD 43/MWh.
Continuing the trend in the final quarter of 2020, negative spot prices remained confined to the southern regions, with Victoria reaching record quarterly occurrences at 10.3%. South Australia remained at what the AEMO described as “very high,” at 16.8%.
“South Australia’s average daytime prices fell below zero consistently between 10 a.m. and 3:30 p.m. (AEST) during the quarter, the first time in the NEM’s history. At the same time, persistently low electricity prices below their cost of generation required AEMO to direct South Australian gas-powered generations on for system security for a record 700% of the quarter,” said AEMO Chief Markets Officer Violette Mouchaileh.
In South Australia, the average spot price during peak solar production was negative AUD 12/MWh.
Increased renewable energy output coupled with reduced daytime electricity demand saw average balancing prices reduced in Western Australia from AUD 56/MWh in the first quarter of 2020 to AUD 47/MWh this quarter. The reduction occurred despite a jump in evening peak demand and a hot summer.
The state set a record for minimum operation demand in the South West Interconnected System (SWIS) on March 14. Operational demand at this time dropped to 952 MW, 33 MW below the previous record, with estimated distributed PV output of 1,026 MW at the time.
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