The third quarter saw significant price declines compared with the corresponding quarter in 2022 right across the National Electricity Market (NEM). At the same time with increased output from solar PV and wind generation in Queensland’s case, minimum operational demand records were set or equalled in every state across the NEM, while the quarter also saw the highest-ever level of negative prices with all regions showing an increase. We dive into the operational demand and wholesale price details of the Australian Energy Market Operator’s (AEMO) Q3 2023 Quarterly Energy Dynamics Report below.
Minimum Operational Demand
The third quarter saw warmer weather with an And an El Nino event declared by the Bureau of Meteorology on 19 September. This follows three years of declared La Nina events. The quarter also saw average operational demand fall 5.1 per cent compared to the same quarter a year ago with an increase in rooftop solar generation a key factor. Operational demand was 21,270 MW, 1,143 MW lower than Q3 2022. The reporting period recorded the highest ever solar PV output for a third quarter at 2,287 MW, up 535 MW from Q3 2022. New South Wales, Victoria and South Australia set new minimum demand records – NSW (7,721 MW) Victoria (5,126 MW) and South Australia (1,351 MW). Unsurprisingly, these states also recorded their highst solar PV output at the same time (see figure 1 below). Queensland recorded a small increase in quarter-on-quarter demand compared with 2022, likely due to the warmer weather the state experienced.
Figure 1 – Operational demand
Source: AEMO Quarterly Energy Dynamics October 2023
The impact of solar PV was again on display as maximum demand across the NEM was 30,758MW down 3 per cebt quarter-on-quarter compared with 2022. On a state-by-state basis, the declines were more pronounced, with NSW declining 7 per cent and South Australia by 6 per cent. An all-time minimum demand record for the NEM was set at 12:30pm on Sunday 17 September 2023, with demand falling to 11,393 MW. This was 499 MW lower than the previous record set on Sunday 6 November 2022.
Operational demand lows were recorded or equaled in four states:
State |
Minimum Demand |
New South Wales |
Equaled its all-time minimum demand record of 4,101MW on Sunday 24 September 2023. The record was set on Sunday 9 April 2023. Solar PV accounted for 46 per cent of generation in the state at the time. |
Victoria |
Set a new demand record at the same time NSW equaled its record. Demand was 2,068 – 127 MW lower than the previous record set on Saturday 18 December 2022. |
South Australia |
Set a new record low of 21 MW on 16 September 2022. Solar PV accounted for 98.5 per cent of demand (1,396 MW). This record was 79 MW lower than the previous record set on 16 October 2022. |
Queensland |
Experienced its lowest operational demand on record since 2002 of 3,387 MW on 17 September 2023. |
Figure 2 – Q3 Minimum Demand for Mainland States
Source: AEMO Quaterly Energy Dynamics October 2023
Wholesale Prices
Wholesale prices were down an average 71 per cent - from $216/MWh in Q2 2022 to $62/MWh in Q3 2023. On 17 November 2022 the Australian Energy Council (AEC) published an EnergyInsider which identified how energy markets were beginning to correct following the massive price increases for coal and gas, which peaked in September 2022. The rationalisation of prices from the peak is reflected in the quarter-on-quarter price change.
It is worth noting that prices in Q3 2023 remain higher than both Q3 2021 and 2020, as can be seen in Figure 3 below.
Figure 3 – NEM average wholesale prices quarterly since Q2 2020
Source: AEMO Quaterly Energy Dynamics October 2023
Factors behind wholesale price changes by state are shown in the table below. South Australia showed the highest volatility in the third quarter, largely in August due to planned outages limiting the flows on the Heywood interconnector. Gas-fired generation entered the market when low wind conditions occurred overnight and backup generation was required.
State-specific figures:
Region |
Q3 2022 Price impacts |
New South Wales |
Recorded a quarterly average of $81/MWh, a 64 per cent reduction from the Q3 2022 average of $225/MWh. Higher interconnector flows were received from Queensland this quarter compared with the same time last year. |
Queensland |
Recorded quarterly average of $65/MWh, a 71 per cent reduction from the Q3 2022 average of $228/MWh. The state recorded a significant quarter on quarter increase in solar PV and wind output compared with the same time in 2022, helping to lower wholesale prices. |
Victoria |
Recorded a quarterly average price of $49/MWh, a 74 per cent reduction from the Q3 2022 average of $192/MWh. |
South Australia |
Recorded the highest volatility in spot prices of any region, with a quarterly average price of $92/MWh. |
Tasmania |
Recorded the lowest average of all the states of $29/MWh. This represents an 86% reduction from the Q3 2022 average of $202/MWh. Lower average prices resulted in a 180 MW increase in exports to Victoria. |
Figure 4 - Average wholesale electricity spot price by region
Source: AEMO Quarterly Energy Dynamics October 2023
AEMO has also pointed to the following overall factors for the fall in wholesale prices during the quarterbeing driven down in Q3 2023:
Negative Wholesale Prices
Negative prices are concentrated in daylight hours, reflecting in particular the availability of solar PV. Figure 5 below shows the occurrence of negative prices across all regions of the NEM.
Figure 5 – Negative Price Occurrence in NEM regions
Source: AEMO Quaterly Energy Dynamics October 2023
More than a third of Australian households now have solar installed, making it the largest generation source, ahead of coal plants. While all parts of Australia has seen growth in solar installations, in our latest Solar Report we highlighted the leading postcodes in terms of installations this year to date. Here we take a look at the demographics behind the suburbs in Victoria, New South Wales and Queensland based on the most recent census.
While Australia is still grappling with the timetable for closure of its coal-fired power stations and how best to manage the energy transition, the UK firmly set its sights on October this year as the right time for all coal to exit its grid a few years ago. Now its last operating coal-fired plant – Ratcliffe-on-Soar – has already taken delivery of its last coal and will cease generating at the end of this month. We take a look at the closure and the UK’s move away from coal.
The Consumer Energy Resources Roadmap has just been endorsed by Energy and Climate Change Ministers. It is considered by government to be the next big reform for the energy system and important to achieving the AEMO’s Integrated System Plan (ISP). Energy Minister, Chris Bowen, recognises the key will be “making sure that those consumers who have solar panels or a battery or an electric vehicle are able to get maximum benefit out of it for themselves and also for the grid”. There’s no doubt that will be important; equally there is no doubt that it is not simple to achieve, nor a certainty. With the grid intended to serve customers, not the other way around, customer interests will need to be front and centre as the roadmap is rolled out. We take a look.
Send an email with your question or comment, and include your name and a short message and we'll get back to you shortly.