The Australian Energy Regulator (AER) has published its latest wholesale markets quarterly report that looks at the wholesale gas and electricity markets in the period from July to September 2022. During the relevant period, gas and electricity prices continued to fluctuate and remained high compared to previous years.
Gas and electricity prices halved in August from record levels in July but have remained consistently high. In June and July, higher winter demand at the time of acute tightening of gas and electricity supply drove wholesale energy prices to record levels. At the same time international: gas prices climbed sharply and the Iona southern gas storage dropped to record low levels. That scarcity of gas influenced by domestic gas and electricity prices.
Exacerbating the situation, a number of coal plants experienced outages and fuel supply issues. The AER notes that as we came out of winter into spring, and demand for heating reduced, domestic gas prices fell from record levels in July ($40.00/GJ) to half that in August ($20.00/GJ) however this was still twice as high as in August 2021.
International energy prices for (gas, thermal coal and oil continued to rise over the quarter and the AER expects them to remain high in 2023 and 2024. They will continue to put pressure on domestic prices. Forward markets indicate relatively high domestic gas and electricity wholesale prices will continue through to 2024.
The AER notes that spring generally brings favourable conditions for wind and solar generation and that while private investment in new electricity generation capacity has slowed over 2022, there are many large-scale batteries in the development pipeline which will support the integration of renewable energy generation. To read the full report, click here.