This article outlines the key insights from the Quarterly Energy Dynamics report from AEMO, including the primary factors driving energy prices in the National Electricity Market.
Key insights from AEMO’s Q2 QED 2024
The Australian Energy Market Operator (AEMO) has released the Quarterly Energy Dynamics (QED) report for Q2 2024, providing a thorough analysis of the wholesale electricity and gas markets in Australia.
Here we have compiled some of the key insights and primary drivers affecting price dynamics across the National Energy Market (NEM).
Quarterly prices up and regional variation
- There was some regional variation with most states experiencing year-on-year increases: New South Wales (up 26% to $137/MWh), South Australia (up 9% to $135/MWh), Tasmania (up 104% to $131/MWh) and Victoria (up 43% to $127/MWh). In contrast with the southern regions, Queensland saw a 20% decrease, with 14% of dispatch intervals recording zero or negative price intervals, setting a new Q2 high
- Wholesale electricity prices in the NEM averaged $133/MWh during Q2 2024, a 23% increase year-on-year. This was primarily due to reduced wind and hydro generation, as well as transmission outages.
Wind and rainfall ‘drought’ a key driver
- The quarter experienced very low wind speeds and below average rainfall across the southern and eastern regions, leading to a significant drop in wind and hydro generation. This led to an increased reliance on gas generation and imports from Queensland to meet operational demand, driving the price increases in the southern states. Gas-fired generation increased by 16% compared to the previous year, while black coal-fired generation rose by 7.3%.
Generator outages, transmission troubles and volatility
- A period of administered pricing was implemented in New South Wales from May 8 to May 15, capping spot prices at $600/MWh due to extreme price volatility caused by major generation outages and transmission line works.
Domestic gas supply dynamics and shortfall notice
- Domestic gas supply trends seen in Q2 2023 continued, with declining gas production from Longford replaced by supply coming in from Queensland, leading to a new Q2 record and greater reliance on Iona Underground Gas Storage.
- East coast wholesale gas prices for Q2 averaged $13.66/GJ, down year-on-year from $14.21/GJ but up from the previous quarter’s $11.60/GJ.
- AEMO issued an East Coast Gas System risk notice on 19 June due to a potential supply shortfall caused by the depletion of southern storage inventories, particularly Iona. The threat is ongoing until no later than 30 September 2024 and the situation continues to be monitored by AEMO.
The full report is available via AEMO. For a tailored conversation on these market dynamics and how they impact your business, get in touch with an SES energy expert today by filling out our contact form or calling us on (02) 9371 4153.
UPCOMING WEBINAR: To further empower businesses to stay informed and ahead of the shifting energy landscape, Sustainable Energy Solutions will be hosting an exclusive webinar on Wednesday 11th September at 11am on The impact of renewables on the energy grid. Register here now.
*Disclaimer: This article is general information only and does not constitute financial advice. Electricity and gas commodities are volatile markets and prices vary daily.
