Ace Business Desk –  Increasing solar power is reshaping the national energy grid, with wholesale prices plummeting during the day but spiking at night. Planned outages of coal-fired power plants have caused problems, contributing to a handful of significant price spikes towards the end of last year.

What’s next?

The Australian Energy Market Operator says the price variations around the country — with power often cheaper in the south than in northern states — highlight the need for new transmission projects.

Renewables have broken new records in the national electricity market, but vulnerabilities remain, according to the latest quarterly report from the energy market operator.

On November 6 last year, renewables provided three-quarters of all the power in the grid for a half-hour period for the first time.

The National Energy Market includes all states in Western Australia and the Northern Territory.

It’s primarily due to a surge in solar power, with output from rooftop solar up 18 per cent and grid-scale solar up 9 per cent.

Almost a quarter of the time, the volume of solar power in the grid pushed the spot price for power below zero — meaning generators were paying major users to consume power, rather than the other way around.

Despite the surge in renewable energy, wholesale prices increased by 88% in the last quarter of 2024 compared to the same period in 2023.

The market operator primarily puts that down to a return to more normal, warmer weather in late 2024, compared to an unusually cool end to 2023.

Planned outages in coal-fired power plants also caused some problems, highlighting vulnerabilities in the grid as it transitions to accommodate more renewables.

The market operator has noted that record low outputs from both black and brown coal generators in the grid pushed up wholesale prices overnight and contributed to major price spikes in November and December.

One such spike occurred on November 27, when the energy market operator (AEMO) issued a warning that a heatwave could place enormous pressure on the grid.@acenewsservices

New South Wales Premier Chris Minns asked residents to avoid running large appliances, like dishwashers and washing machines, for a few hours to ease pressure on the grid.

During that incident, the wholesale power spot price hit the market cap of $17,500 (the average for the quarter was $88).

Demand for power climbs to new highs (and falls to new lows)

The end of last year also saw new records set at both ends of the demand spectrum.

The sustained warm temperatures, alongside the increasing electrification of household appliances, have led to a notable rise in power demand over the year’s final quarter, exceeding a two per cent increase compared to the previous year.

But at the same time, the volume of solar power being generated on rooftops pushed demand to record lows at other times during the period.

For the first time, coal made up less than half of the power consumed in the national energy grid, while renewables made up 46 per cent.

Coal plants not only provide electricity — they also help keep the grid strong. (Supplied: AGL)normal

Violette Mouchaileh from AEMO said there was significant variability between wholesale prices in northern states and southern states, highlighting the need for new transmission projects to move power around the country.

“Recent operating conditions highlight the role new transmission projects underway — such as VNI West, Project EnergyConnect and HumeLink — will play in sharing the lowest-cost energy throughout the NEM,” she said.

Bowen claims coal ‘unreliability’ pushing up prices

The debate over the future of the national energy grid will be a central theme of the looming federal election, with Labour and the Coalition presenting very different pitches.

The Coalition has argued that an over-reliance on renewables will destabilise the grid and require an unnecessary over-investment in transmission lines.

It seized on headlines around leaders urging households not to run dishwashers to warn the grid was becoming unreliable, as coal was phased out and replaced by renewables.

Energy Minister Chris Bowen says more renewables in the system bring wholesale prices down. (AAP: Mick Tsikas)normal

It is pitching nuclear power as an ideal replacement for coal-fired generation, while Labour argues nuclear power is unfeasible and overly expensive.

Energy Minister Chris Bowen said AEMO’s latest figures support Labour’s renewable-led plans.

“The data confirms what we know — unreliable coal is having a negative impact on energy prices, more renewables in the system bring wholesale prices down, and new transmission infrastructure is critical to keeping prices lower.

“We are building an energy grid so everyone, everywhere, has access to the cheapest form of energy at any given time.”

The Coalition’s energy spokesperson, Ted O’Brien, said the report confirmed the energy market was “spiralling out of control.”

“Australian households and businesses are being smashed by skyrocketing power bills… Labour’s ideological war on coal and gas has weakened the grid, and as a result, Australians are paying more for less reliable energy.”

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