Renewable energy is squeezing fossil fuels further out of Australia’s power mix, accounting for a record-high share of average electricity generation in the final three months of 2021 and threatening the viability of coal-fired power plants.
The influx of large-scale wind and solar farms coupled with an ongoing boom in the uptake of rooftop solar panels have been radically reshaping the national electricity market and slashing daytime wholesale prices to levels at which the dominant sources of power – coal and gas – struggle to compete.
In a report, figures from the Australian Energy Market Operator (AEMO) reveal renewable energy accounted for a record-high average of 34.9 per cent of generation across the three months to December 31, beating the previous record of 31 per cent set in the prior quarter.
While coal still makes up most of the nation’s power, black coal fell to its lowest seasonal average share for the December quarter since the east coast electricity market was created in 1998, while gas recorded its lowest since 2003.
The changing power-generation mix helped push wholesale prices below $0 more than 11 per cent of the time in 2021, doubling the previous year’s average.
AEMO said greater renewable energy output combined with cooler La Nina weather temperatures in the December quarter had contributed to record-low daytime power demand levels in the grid.
“Below-average temperatures, reduced demand and increased renewable installations in the National Electricity Market contributed to new records for minimum operational demand,” AEMO head of reform delivery Violette Mouchaileh said.
“Grid-scale solar, wind, hydro and rooftop solar photovoltaic [PV] continued to displace thermal generation.”
Rock-bottom wholesale power prices – which regulators say is good news for consumers because they may eventually translate to lower bills – have been piling enormous pressure on the operators of coal-fired power stations.
Large coal-fired generators, which are unable to compete with cheaper-to-run renewables during the day but cannot quickly ramp up and down output to respond to price signals, have been forced to regularly operate at a loss over the past 12 months.
EnergyAustralia last year announced it would shut Victoria’s Yallourn coal-fired power plant in 2028, four years earlier than planned. AGL, the nation’s biggest power supplier, declared the “winds of change” were sweeping the sector much faster than anticipated, prompting the company to embark on a historic demerger of its coal and gas generators from its wider retailing business after sinking to a $2.06 billion full-year loss in the 12 months to June 30.
Because electricity production is a dominant source of Australia’s emissions, reducing output from coal plants would help sharply reduce the national carbon footprint.
However, concerns have been building across the industry that unexpectedly early shutdowns of coal-fired generators could threaten the reliability of the nation’s power market and cause price volatility in the future.
Tony Wood, energy program director with the Grattan Institute think tank, said there were positive takeaways from AEMO’s December quarterly figures, including falling power prices, high levels of reliability and reduced greenhouse gas emissions in the sector. However, he said the increasing risk of extreme volatility was a cause of concern.
Source: www.smh.com.au