Renewables take wind out of coal’s sales
Coal generation has fallen to its lowest level for at least 12 years, with the record uptake of wind and solar energy driving wholesale electricity prices to a five-year low.
Wholesale prices have fallen below $85 per megawatt hour across Australia for the first time since 2015, while gas prices, at below $7.25 in all regions, are at their lowest level in four years.
The Australian Energy Regulator’s analysis of the wholesale energy market in the June quarter shows that the average wholesale spot price fell to $56 per MW hour in Queensland, the lowest level since 2012.
Victoria had the highest average wholesale prices at $84 per MW hour.
AER chair Clare Savage said coal generation — which stands at 71 per cent of energy output — was lower than at any time since the National Energy Market was formed in 1998.
Wind and solar generation contributed to 13 per cent of the energy mix, sharply up from just 6 per cent in 2017.
“We have seen record high renewable output and record low coal output since the start of the National Electricity Market,” Ms Savage said.
“Coal, gas and hydro have been setting significantly lower prices than a year ago. Low fuel prices led to more capacity offered into the market at low prices.”
Ms Savage said wholesale gas and electricity costs made up about a third of the average household energy bill.
“It can take time for gas and electricity wholesale price drops to flow through to household bills because many retailers have bought a lot of their wholesale energy a year or two in advance when wholesale prices were higher than they are now,” she said.
“These wholesale price reductions have begun to flow through to customers, though, and retail prices should fall further over the coming year.”
The AER report also shows that total east coast gas production has reached record levels, increasing by 5 per cent from last year to 1948 petajoules.
Energy Minister Angus Taylor said cheap gas would be vital to Australia’s recovery from the COVID-19 recession.
“Affordable gas has never been more important, particularly as the Australian economy recovers from the impact of the COVID-19 pandemic,” Mr Taylor said
“This is why the Australian government believes a gas-fired recovery will drive jobs and economic growth.
“Gas also has an important role to play in providing grid reliability and in reducing emissions (because) it is complementary to renewables, not a competitor.”
Opposition resources spokesman Joel Fitzgibbon and opposition energy spokesman Mark Butler this week clashed over whether the Labor Party should back a proposal for taxpayer backing of gas infrastructure.
There was even a disagreement over which of the two of them was the responsible shadow spokesman for policy on gas pipelines.
Sources close to Mr Butler said it was in the remit of his energy portfolio, while sources close to Mr Fitzgibbon said the issue sat within resources.
Greens leader Adam Bandt said the gas issue was turning into “Anthony Albanese’s Adani”.
“Labor’s refusal to have a stance on the country’s biggest coalmine helped the Coalition, and unless Labor starts to side with the Greens in taking on the Liberals, history may repeat,” Mr Bandt said. “Labor’s doublespeak on gas is making it harder to kick the Coalition out at the next election.”