Record renewables, batteries push Australia's power prices to 5-year low

Wholesale electricity prices fell 47% year-on-year.

Australia's wholesale electricity prices fell to their lowest June quarter level since 2020 as record renewable energy generation and expanding battery storage increased lower-cost power supply.

According to the Australian Energy Market Operator's (AEMO) latest Quarterly Energy Dynamics report, Renewables supplied a record 42.1% of electricity generation in the National Electricity Market (NEM), up from 37.1% a year earlier.

Wind generation rose 20%, grid-scale solar increased 12%, and rooftop solar grew 6.9%, whilst coal generation fell 5% and gas-fired generation dropped 30% to its lowest second-quarter level since 2003.

"Record renewable generation, combined with growing battery storage and consumer energy resources, continues to reshape Australia's energy markets," said AEMO executive general manager policy and corporate affairs Violette Mouchaileh.

"These technologies are changing demand patterns, supporting system reliability and increasing the amount of lower-cost energy available across the market,” she added.

Average wholesale electricity prices in the NEM fell 47% year-on-year to $74 per megawatt hour (MWh). Victoria recorded the biggest decline at 60%, followed by New South Wales (53%), Queensland (44%), Tasmania (39%) and South Australia (38%).

During the quarter, 14 new generation and storage projects with a combined capacity of 3.9 gigawatts (GW) reached full output. Household battery capacity increased 41% to 3,283 MWh, whilst grid-scale battery capacity more than doubled over the past year to exceed 9 GW.

AEMO also said 17 proposed data centre projects with a combined maximum connection capacity of 9 GW were progressing through the transmission connection process by the end of June.

In Western Australia, more than 1 GW of grid-scale battery capacity was added over the past year. However, wholesale electricity prices rose 30% year-on-year to $118/MWh as lower wind and coal generation increased reliance on gas-fired power.

Meanwhile, east coast wholesale gas prices fell to $9.08 per gigajoule, the lowest June quarter average since 2021, as total gas demand declined 3% despite record second-quarter LNG exports from Queensland.