Each quarter, the Australian Energy Market Operator (AEMO) release their Quarterly Energy Dynamics (QED) report providing a detailed overview of the energy market. This article outlines the key insights from the Q3 report, including the primary factors driving energy prices in the National Electricity Market.

Key insights from AEMO’s Q3 QED 2024

The Australian Energy Market Operator (AEMO) has released the Quarterly Energy Dynamics (QED) report for Q3 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).

Average NEM demand higher with extremes at either end

• Average NEM demand was higher in Q3 2024 compared to Q3 2023, with a 3.4% increase in underlying demand and 2.6% increase in operational demand. This was despite a new Q3 high for distributed PV (+11% to 2539MW).
• Extremes were observed at either end with both high and low demands. New winter maximum demand records in Queensland (8,728 MW) and Victoria (8,612 MW) set during July and all-time minimum demand records set in Queensland (3,096 MW) in August and New South Wales (3,555 MW) in September, along with a new Q3 minimum for Victoria (1,937 MW) in September.

Higher demand, network outages and reduced hydro generation drove prices up

• Wholesale spot prices across the NEM averaged $119 per megawatt hour (MWh) in Q3 2024, 11% lower than the previous quarter but 88% higher than Q3 2023. These price increases were driven primarily by the winter months.
• Hydro generation volume was down significantly, particularly notable in Tasmania where average hydro generation fell 32%, offset by more gas generation and imports from Victoria, driving prices up 282% year-on-year.
• Network outages in late July and early August restricted exports from Victoria into South Australia. This played a major role in South Australia recording the highest regional quarterly average spot price in the NEM, at $158/MWh
• Multiple instances of high NEM-wide demand drove intervals with simultaneous high prices across NEM regions during morning or evening peaks, particularly in late July and early August. Wholesale electricity prices averaged $121/MWh in New South Wales, $104/MWh in Victoria and $100/MWh in Queensland.

Renewable contribution increasing

• A new peak renewable contribution record was set in the half-hour period ending 1200 hrs on Monday, 9 September 2024, when renewable sources supplied 72.2% of total NEM generation. In this interval distributed PV comprised 38.5% of total generation, while grid-scale solar and wind provided 18.3% and 13.4% respectively.
• After recent low averages in Q2, wind pushed up to a new quarterly high, up 21% from Q3 2023.
• Renewable potential exceeded 100% this quarter, marking a key milestone in the transition towards operation at times with 100% renewable supply.

Transmission projects progressing

• At the end of Q3 2024, 45.6 gigawatts (GW) of new capacity was progressing through the connection process from application to commissioning, a 36% increase compared to at the end of Q3 2023. This capacity includes 14.6 GW of battery projects, 87% more than this time last year.
• Connections projects reaching milestones during Q3 2024 increased substantially, with 2.6 GW reaching application approval, 3.5 GW registered and connected to the NEM, and 1.3 GW progressing through commissioning to reach full output.

Gas demand increasing

• East coast wholesale gas prices averaged $12.50 per gigajoule (GJ) for the quarter, higher than Q3 2023’s $10.41/GJ but lower than Q2 2024 which averaged $13.66/GJ.
• Gas demand increased by 3% from Q3 2023, driven by higher demand for gas-fired generation (+7 petajoules (PJ)), while demand for Queensland liquefied natural gas (LNG) exports also increased (+5 PJ), setting a Q3 demand record. AEMO markets demand slightly increased (+0.5 PJ), impacted by significantly warmer than average temperatures in August.
• The East Coast Gas System threat or risk notice that was issued by AEMO on 19 June 2024 was revoked on 23 August 2024 as gas supply and demand trends improved in New South Wales, the Australian Capital Territory, Victoria, South Australia, and Tasmania. The notice was for potential gas supply shortfalls caused by the depletion of southern storage inventories, particularly Iona underground storage (UGS). Iona UGS storage inventories recovered during August from their low point early in the month, assisted by warmer weather and reduced gas-fired generation
• While domestic gas supply dynamics continued to be influenced by declining Longford gas production and greater reliance on supply from Queensland to southern states, the Otway Gas Plant in Victoria had the largest increase to domestic supply in Q3 (+9.4 PJ), due to commissioning in June of the new Enterprise gas field.
• Compared to 2023, June 2024 saw significantly higher gas-fired generation, colder weather, rapid emptying of Iona storage inventory and record gas flows from Queensland to southern markets, with higher prices as a result. This led to a very different landscape starting Q3 2024 compared to 2023, with Iona storage inventory 8 PJ lower, and AEMO having issued an East Coast Gas System Risk or Threat Notice in June due to the potential for gas supply shortfalls caused by the high rate of depletion of southern storage inventories. This had the effect of July 2024 offers being higher than for the same period in 2023, which continued throughout the quarter.

Western Australia electricity and gas highlights

• An increase in average underlying demand (+88 MW), which included an average increase in battery withdrawal (charging) (+9 MW) compared to Q3 2023, was offset by an increase in distributed PV (+78 MW).
• During the 12:20 interval on Sunday 22 September 2024, a new minimum unscheduled operational demand record of 538 MW was experienced, driven by 2,005 MW of distributed PV. During this interval, batteries were withdrawing 131 MW, which helped lift operational demand to 680 MW for the interval.
• Increases in wind (+90 MW), distributed PV (+78 MW) and batteries (+9 MW) compared to Q3 2023 drove a new Q3 renewable contribution high of 35.2%, surpassing the 29.6% seen in Q3 2022.
• Domestic gas production increased to 106.3 PJ (+6%) compared to Q3 2023. A full year of production at Walyering assisted with this increase, coupled with higher production volumes at Karratha Gas Plant and Wheatstone.

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.

*Disclaimer: This article is general information only and does not constitute financial advice. Electricity and gas commodities are volatile markets and prices vary daily.