The National Electricity Market has experienced a remarkable shift, driven by abundant solar power.

Green energy has driven wholesale electricity prices below zero for an unprecedented 19 per cent of the time during the September quarter. 

This surge in negative prices affected all regions of the market, leading to a decline in daytime averages. 

The findings were revealed in a new report by the Australian Energy Market Operator (AEMO).

While renewable energy reached nearly 39 per cent of total electricity supply in the third quarter of 2023, consumers have yet to benefit from reduced wholesale prices, as they faced significant price hikes earlier in the year. 

Electricity default tariffs for households in multiple states increased by more than 20 per cent on average on July 1. The possibility of tariff reductions next year depends partly on wholesale market performance during the upcoming summer, which AEMO has already warned could be challenging due to returning hot El Niño conditions.

A key highlight from the AEMO analysis was the breaking of multiple records in the power market during the quarter.

Notably, a record 11.9 gigawatts of rooftop solar output was achieved, contributing to renewable energy's record 70 per cent share of total electricity supplied during a half-hour period.

The surge in rooftop solar generation underscores the growing pressure on coal-fired power plants, which still provide approximately 60 per cent of Australia's power on average throughout the year. 

However, they are facing increasing competition from the lower prices of wind and solar on the wholesale market. 

Plentiful daytime solar power is more frequently pushing wholesale prices to zero or lower, potentially causing losses for coal-fired plants unless they can reduce their capacity.

This situation has led to state governments in Victoria and New South Wales striking deals with AGL Energy, EnergyAustralia, and Origin Energy to support the continued operation of coal-fired plants until replacement capacity is available.

AEMO also noted that wind and solar generators are increasingly bidding their power at negative prices, reflecting the value of the renewable energy certificates they generate, which offer revenue independent of the electricity market.

During the quarter, the 19 per cent of pricing periods with negative prices more than doubled the levels of the June quarter and the previous September quarter. South Australia experienced the most negative prices, with prices falling below zero for a quarter of the time, often dropping below -$45 per megawatt-hour.

The record-setting trends were reinforced by above-average temperatures across Australia, which reduced grid power demand as more household solar PV panels met the power requirements. 

“Operational demand”, a measure of demand from the grid, reached a new low for the third quarter, at 21,270 megawatts. The NEM's overall demand also hit a new low, decreasing by nearly 500 megawatts from the previous minimum.

South Australia, Queensland, and Victoria all set minimum demand records in the quarter, with South Australia achieving a demand low of just 21 megawatts when rooftop solar supplied 98.5 per cent of the state's underlying electricity demand.

These records continued to be broken, with AEMO recently reporting a new high for renewable energy penetration in the NEM at 71.3 per cent during a 30-minute period. Rooftop solar contributed to over 44 per cent of total electricity generation at that time.

Wholesale prices decreased significantly from the elevated levels of 2022, with the average price across the NEM falling by 71 per cent compared to the previous September quarter, reaching $63 per megawatt-hour. 

South Australia had the highest average price at $92 per megawatt-hour, while Tasmania had the lowest at $29 per megawatt-hour.

These findings align with the observations of the Australian Energy Regulator, which reported a 5 per cent decrease in electricity demand for the September quarter and a 31 per cent increase in rooftop solar output.