It has been a wild couple of weeks for energy prices in Australia with severe pressure on both wholesale gas and electricity prices – not to mention supply.
In yet another “welcome to power” moment for the freshly minted Albanese Federal Government, the rapidly mounting prices – which are sure to filter through to business and consumers over time – have led to a raft of calls to reserve more gas, stop exports and “manage” domestic coal prices.
Hopefully there is enough experience in the Albanese front bench to not get tricked into rapid, knee-jerk action by some of the more dramatic warnings from pundits, which have included the destruction of the manufacturing sector, a housing crash, recession and a failure of the energy market.
Gas reservation does seem to work in WA
There are some interesting observations that can be made about the runaway prices though – one of them being that the WA gas reservation system appears to have been successful at holding domestic gas prices on that side of the country down to under $6 gigajoule (GJ) at a time when on the east coast gas prices briefly rose as high as $382GJ.
That is a big difference when you consider the long-term average gas price is around the $3GJ mark, with gas and electricity consumers readying themselves for significant price rises from their retailers due to the early winter cold snap.
Renewables played a big part in moderating prices and supply issues
One aspect of Australia’s energy mix that was missed in all of the fuss about runaway prices and the strained power and gas grids was the impressive role of renewable energy sources such as wind and solar in mitigating the worst of the issues.
On Tuesday of last week, the combined output of wind and large-scale solar farms set a new record, while wind generation also posted a new high.
Combined wind and solar output reached a new peak of 9,133MW at 2:40pm on the last day of May, while later in the same day wind output alone hit a record high of 6,852.5MW.
It was a well-timed boost with the wild cold fronts that were sweeping across southern Australia and prompting many households and businesses to crank up power usage also spinning the wind generators.
When will we hit bursts of 100% renewable supply?
It is important to note that the wind and solar output only helped to moderate soaring wholesale electricity prices for a while, things could have been a lot worse without the growing impact of renewable energy.
The most notable price effect was in South Australia, where renewables provided more than 100% of local demand, which caused wholesale prices to jump as the sun set and solar output fell.
Renewables including hydro were supplying more than 50% of the grid at times during the afternoon, with projections that could on occasions reach 100% by 2025 if renewable generation keeps expanding.
Obviously, gas peaking plants and baseload coal generators will continue to play a very big role in keeping the grid running and stable for decades to come, but at the very least, the current crisis due to high prices and coal plant shutdowns could have been a lot worse without the increasing array of distributed renewable power plants around the country.