The wholesale price of electricity almost halved across the national energy market (NEM) towards the end of 2023. So will this mean lower energy prices for consumers in 2024?
A check of power generation across the NEM reveals wholesale energy prices fell to an average of $48 per megawatt hour (MWh) in the December 2023 quarter, which is 48 per cent down from 12 months earlier.
The Quarterly Energy Dynamics report, compiled by the Australian Energy Market Operator (AEMO), says that generation from grid-scale renewable projects, as well as rooftop solar, are at record levels.
Daniel Westerman, AEMO CEO, says as well as driving carbon emission levels to new lows, renewables have halved wholesale generation prices on the east coast.
“More low-cost renewable energy was generated and wholesale energy prices have fallen – a record number of times to zero, and beyond, into negative territory,” he says.
“Early in the afternoon of 31 December, rooftop solar met 101 per cent of South Australia’s total electricity demand.
“While on the afternoon of 24 October, rooftop solar and grid-scale renewables provided 72 per cent of all electricity across the east coast.
“We are regularly seeing records set for the higher contribution of renewables, and lower levels of energy drawn from the grid because of rooftop solar.”
Where were wholesale prices lowest?
The lowest average energy spot prices recorded for the quarter were in Victoria ($26/MWh) and South Australia ($33/MWh).
Higher average prices were found in Tasmania ($50/MWh), NSW/ACT ($66/MWh) and Queensland ($68/MWh) – but these were also down almost 50 per cent on the year before.
AEMO says the higher prices in NSW and Queensland are mostly due to increased demand due to heatwaves at the end of 2023.
The data also showed that in the fourth quarter, 20 per cent of dispatch intervals (time periods over which energy spot prices are measured) across the NEM registered zero or even negative prices, which is a 3.3 per cent increase on the same period last year and a new high for any quarter.
“We know zero prices mainly happen in the middle of the day, and are being driven by low-cost renewable generation,” Mr Westerman says.
“With the right energy storage, like batteries and pumped hydro, the benefits of free and low-cost energy can be spread further across the day.
Energy minister Chris Bowen told the ABC the figures were evidence the broad push to renewables was progressing as planned.
“AEMO’s report … shows the shift to renewable energy is working exactly as it should with wholesale prices being cut in half over the past year as renewables hit an all-time record output and the Albanese government’s coal and gas caps took effect,” he said.
What does this mean for your energy bills?
The renewable energy generation is good for the environment, but will it drive down your energy bills? The short answer is, not unless you actively look for a better deal.
The cost of generating power has been on a downward trend for at least six months, but many customers’ bills have been rising due to increased charges from retailers.
But Kate Browne, head of research at consumer research group Compare Club, says there are many retailers out there willing to slash these charges in order to compete on prices.
“Wholesale energy prices dropping is great news for consumers, if you haven’t had your energy bill reviewed in the last year or even the last six months this is the time to do it. Depending on your location you could save up to $500 by switching to a better deal.”
“Switching is one of the easiest ways to save money and now is the time to lock in a better deal, there’s no paperwork and generally can be done in a single phone call.”
“Many energy retailers offer the option to lock your rate for up to 12 months so be sure to ask if this is possible when you are locking in a new deal too.”
Disclaimer: YourLifeChoices is owned by Compare Club.