Record solar output helps drive energy costs down

While stressed households grapple with surging power bills and other living costs, the wholesale price of electricity and gas has fallen sharply in the past three months, suggesting consumers can expect more moderate increases in charges in coming months.

The Australian Energy Regulator reported that wholesale electricity prices across the national energy market averaged below $100 per megawatt in the September quarter, less than half the level of a year earlier.

The result has been driven by a sustained decline in demand for electricity, which slumped to a record low last quarter, as output from rooftop solar jumped 41 per cent from a year earlier and mild temperatures cut usage.

Demand in the September quarter was the lowest ever on record for that time of year and was down by around 5 per cent from 12 months earlier.

The regulator said fewer coal generator breakdowns and supply issues as well as lower global fuel prices also contributed to the result.

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In evidence that the energy transition is advancing, the AER reported that black coal accounted for 45 per cent of total power in the national market, its smallest share on record.

AER board member Jarrod Ball said the addition of 800 megawatts of renewable energy capacity to the system in the September quarter was pleasing but "more is needed to keep pace with the planned coal plant retirements over the next decade".

The outlook for gas is also more promising.

The relatively mild winter helped reduce demand for gas to a 10-year low. As a result, spot prices are averaging just above $10 a gigajoule - well below the $12 a gigajoule cap set by the government and 60 per cent lower than the same time last year.

The reduction is demand has also meant that gas storage volumes have reached a record high. The AER said that, as a result, "market participants are better placed to manage...demand peaks over summer, should they arise," the regulator said.