Renewable energy’s rapid expansion significantly slashed wholesale power prices in the national energy grid during the latter part of last year.

Prices dropped by more than half in the final quarter of 2023 compared to the same period in the previous year, primarily due to the surge in power generated from large-scale renewables and rooftop solar installations.

For a few hours on New Year’s Eve, South Australia achieved a remarkable feat by relying entirely on rooftop solar panels to meet its energy needs.

A recent report from the Australian Energy Market Operator underscores the increasing significance of renewables in the energy grid, with renewable sources accounting for up to 72% of the total power demand on the east coast during specific intervals over the three-month period.

Regional variations

However, power demand and wholesale prices exhibited regional variations, with Queensland and New South Wales experiencing higher prices compared to South Australia and Victoria.

This disparity can be attributed to an unusually warm spring and summer in some regions of the country.

The national energy market encompasses all states except Western Australia and the Northern Territory.

AEMO’s CEO, Daniel Westerman, emphasized that renewables will continue to exert a growing influence on the energy grid.

He stated, “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.”

Westerman also highlighted the potential for renewables to push the spot price of power below zero, particularly during daylight hours.

Throughout the three-month period, the spot price in the national energy market was at or below zero approximately one-fifth of the time. AEMO predicts that such opportunities will become crucial in the coming years, particularly as pumped hydro projects like Snowy 2.0 rely on affordable energy to pump water uphill.