Officials say Australia saw record power prices for Q2 2022.

The Australian Energy Market Operator’s (AEMO) Quarterly Energy Dynamics (QED) report for Q2 2022 shows wholesale electricity spot prices averaging $264 per megawatt-hour (MWh) in the National Electricity Market (NEM), up by $177/MWh on the previous quarter and $179/MWh on Q2 2021’s $85/MWh average.

These high prices triggered the application of administered price caps, first in the gas markets and then in the NEM. 

Consequently, reductions in generation offered in the NEM led to reserve shortfalls that required extensive AEMO intervention to maintain reliability and, ultimately, the suspension of the spot market in all regions between 15 and 24 June.

The complex and challenging quarter underscores the need to accelerate the transition to the cheapest form of reliable electricity, according to AEMO. 

“Wholesale energy price hikes and volatility were driven by multiple factors, including high international commodity prices, coal-fired generation outages, elevated levels of gas-fired generation, fuel supply issues, and many east coast cities experiencing their coldest start to June in decades,” says AEMO Executive General Manager – Reform Delivery, Violette Mouchaileh.

“These factors also drove the frequency of NEM spot prices exceeding $100/MWh from 14 per cent in Q2 2021 to 86 per cent in Q2 2022, and above $300/MWh from 1 per cent to 26 per cent.

“What’s clear is the urgent need to build-out renewable energy with diversified firming generation - like batteries, hydro and gas - and transmission investment to provide homes and businesses with low-cost, reliable energy,” she said.

Coal-fired generation outages reached highs of around 3.6 gigawatts (GW) in late April and peaked in June at 4.6 GW. 

Outages, bidding changes and fuel supply constraints saw black coal generation’s average quarterly output down by 947 MW or 8.5 per cent from Q2 2021 to its lowest Q2 output on record, its share of NEM supply falling 4.8 percentage points to 43 per cent.

In contrast, gas-fired generation was up 27 per cent (472 MW) from Q2 2021 to its highest Q2 level since 2017. 

Renewable generation increased 21 per cent on Q2 2021 with the total NEM renewable supply share for the quarter reaching 31.8 per cent, up 3.7 percentage points driven by new capacity additions and commissioning.

Coal-fired generation in the WEM decreased by 12 per cent, while gas-fired generation overtook coal as the primary fuel towards the end of the quarter. 

Distributed photovoltaics (DPV) continue to grow, with total installed DPV capacity in Q2 2022 reaching 2,174 MW, 22 per cent higher than this time last year.