Fossil fuels for brisk conditions
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Australia’s energy market is feeling the chill, but coal and gas have kept the lights on.
In its September quarter figures (PDF), the Australian Energy Market Operator (AEMO) has noted increased reliance on coal and gas generation in Australia’s National Electricity Market (NEM) and East Coast gas market, largely due to colder-than-average weather and heightened demand.
NEM emissions rose for the third straight quarter, with black coal and gas plants meeting increased power needs, leading to a 2 per cent rise in greenhouse emissions compared to the September quarter of 2023.
Total emissions reached 28.4 million tonnes of CO2 equivalent.
The rise was fuelled by higher power demand, which saw a 3.4 per cent increase over the previous year, attributed to a colder start to spring and despite gains from renewables.
Average gas-fired power output increased by 29 per cent to 1,493 megawatts, meeting intervals of higher demand across the NEM.
Black coal generation rose 1.8 per cent, while brown coal showed a slight decline, averaging 3,703 megawatts.
The impact of distributed rooftop solar partially offset demand increases, reducing the operational demand growth rate to 2.6 per cent.
Electricity prices surged, driven by these demand spikes, with AEMO reporting average spot prices of $119 per megawatt hour, marking an 88 per cent year-on-year increase.
Cold weather during July and August drove prices as high as $163 per megawatt hour in July, followed by a sharp decline to $46 in September.
“Multiple instances of high NEM-wide demand drove intervals with simultaneous high prices”, especially during morning and evening peaks, AEMO’s report says.
East coast gas prices also rose, averaging $12.50 per gigajoule, up from $10.41 last year.
Higher prices were partly linked to increased gas demand for power generation and record liquefied natural gas (LNG) export demand in Queensland.
Despite coal and gas generation gains, renewable energy’s share hit a record 39.3 per cent of NEM demand.
Wind output rose 21 per cent year-on-year, averaging 4,044 megawatts, offsetting a decline in hydroelectric generation, with operators conserving water reserves.
Solar generation achieved substantial gains as well, with rooftop installations hitting a peak quarterly output of 2,539 megawatts, an 11 per cent increase from 2023.
On 18 September, renewable energy potential exceeded demand, reaching 100.5 per cent capacity, but AEMO reported instances of “economic offloading” due to grid constraints, leading to curtailment and a 4.5 per cent reduction in average solar farm output.
AEMO also reported progress in Australia’s energy infrastructure, with 45.6 gigawatts of new renewable projects under development - a 36 per cent increase.
Battery storage showed significant growth, with 14.6 gigawatts in the project pipeline, an 87 per cent increase from last year.
“It is promising to see Australia’s energy transition continue with more renewable generation capacity either coming online or progressing,” said Violette Mouchaileh, an AEMO executive.
She highlighted a new milestone on 9 September when renewables met 72.2 percent of NEM demand, led by rooftop solar.
As Australia expands renewable capacity and battery storage, the market is moving towards greater resilience. Still, fossil fuels remain crucial to balancing seasonal demand surges.