Cold Weather Drives Record Electricity Demand in Australia: Key Insights from AEMO’s Quarterly Report
The Australian Energy Market Operator (AEMO) recently released its Quarterly Energy Dynamics report, revealing how the cold weather in June 2024 has significantly impacted electricity demand and generation in the National Electricity Market (NEM).
Record Electricity Demand
Colder temperatures, especially in Victoria, have led to record-high electricity demand during the June quarter. AEMO CEO Daniel Westerman noted that persistent cold snaps drove higher morning peak demands, marking a new high for the quarter.
Changes in Power Generation
The cold weather affected renewable energy output:
- Wind Generation: Down 20% from last year, averaging 2,657MW, the lowest since 2017.
- Hydro Generation: Fell by 18%, averaging 1,607MW, also the lowest since 2017.
To compensate, there was a notable increase in fossil fuel generation:
- Gas Generation: Up 16%.
- Black Coal Generation: Up 7%, thanks to improved availability of Queensland’s black coal-fired generators.
Importance of Batteries and Flexible Generation
Batteries have become crucial in managing demand peaks, with their generation during morning and evening peaks more than doubling compared to last year. This highlights the growing importance of batteries, pumped hydro, and flexible gas generation as renewables become more dominant.
Rising Electricity Prices
Electricity prices have surged by 23%, averaging $133/MWh across the NEM in the June quarter, up from $108/MWh in Q2 2023. Prices varied by state:
- New South Wales: $173/MWh
- South Australia: $135/MWh
- Tasmania: $131/MWh
- Victoria: $127/MWh
- Queensland: Decreased to $101/MWh due to increased black coal availability and fewer outages.
Gas Market Trends
East coast wholesale gas prices averaged $13.66 per gigajoule (GJ), slightly down from $14.21/GJ in Q2 2023. Gas-fired generation demand rose by 18%, although there were concerns about declining gas supply from Victoria’s Longford Gas Plant. AEMO alerted the industry about potential supply risks due to low inventory in the Iona underground gas storage.
Western Australia’s Renewable Surge
Contrasting the east coast, Western Australia enjoyed warmer weather, achieving a new Q2 renewable penetration record of 30.8%. This was driven by increases in small-scale solar (+49MW) and wind generation (+75MW), which reduced gas-fired generation by 134MW. Despite lower operational demand, energy prices remained stable due to reduced coal and gas-fired generation availability.
Conclusion
AEMO’s report underscores the dynamic nature of Australia’s energy market, heavily influenced by weather conditions, renewable energy availability, and the pivotal role of flexible generation sources in maintaining grid stability.
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