fo4y(nn9vrmww22656e66inw_media_dl_1.png AEMO, Bloomberg

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(Bloomberg) — Power prices almost halved in Australia last quarter, as renewables and batteries pushed out natural gas-fired generation in the main grid. 

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Wholesale spot prices in the National Electricity Market averaged A$74 ($51.71) a megawatt-hour in the three months through June, down 47% from a year earlier, the network operator said in its latest Quarterly Energy Dynamics report. Gas-powered generation fell by a third to its lowest second-quarter average since 2003.

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Renewables generated a record 42% of power in the NEM, which covers more than 80% of Australia’s demand, but still trailed coal as the main source. Meanwhile, growing grid-scale battery capacity more than tripled the volumes of energy shifted from daytime periods of high solar output into the evening peak, according to the report.

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The drop in prices during the quarter — traditionally the most costly as the southern hemisphere winter starts — will be welcome news to policymakers focused on costs of living, although the impact on consumer bills may be limited. It will also fuel a debate on whether more gas is needed to support the grid in periods of low renewable generation as the nation shuts down its aging coal plants. 

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“Batteries are increasingly usurping gas as the primary balancing technology for intraday variability in renewable generation,” said Sahaj Sood, an analyst at BloombergNEF. “However, questions remain over their suitability for balancing longer-term droughts in renewable supply.”

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East coast wholesale gas prices averaged A$9.08 a gigajoule, down from A$12.36 a year earlier and the lowest quarterly average since the second quarter of 2021, according to the report.

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Meanwhile, prices in Western Australia’s Wholesale Electricity Market soared 30% year on year to a record A$117 a megawatt-hour because of reduced coal and wind generation. However, increased use of batteries saw a sharp drop in intraday price swings.

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