Quarterly Energy Dynamics Q2 2024 - July 2024

Table of Contents

• Purpose 2
• Disclaimer 2
• Copyright 2
• East coast electricity and gas highlights 3
• Wholesale electricity prices rose with low wind and rainfall and periods of price volatility 3
• Low wind and hydro output drove increased thermal generation and a southward shift in inter- 3
• East coast gas supply dynamics changing higher domestic prices in June increased gas-fired 4
• Western Australia electricity and gas highlights 4
• Increase in distributed photovoltaic PV generation more than offset underlying demand 4
• Energy prices remained flat despite the drop in operational demand from Q1 2024 4
• Total real-time market costs increased driven by increases in frequency co-optimised essential 5
• Domestic gas consumption increase was more than offset by production increases 5
• Contents 6
• 1 NEM market dynamics 7
• 1.1 Electricity demand 7
• 1.1.1 Weather 7
• 1.1.2 Demand outcomes 8
• Maximum and minimum demands 10
• 1.2 Wholesale electricity prices 11
• 1.2.1 Wholesale electricity price drivers 14
• 1.2.2 Wholesale electricity price volatility 14
• Administered Price Period in New South Wales 15
• 1.2.3 Negative wholesale electricity prices 16
• 1.2.4 Price-setting dynamics 18
• 1.2.5 Electricity futures markets 20
• 1.3 Electricity generation 22
• 1.3.1 Coal-fired generation 24
• Black coal-fired fleet 24
• Brown coal-fired fleet 26
• 1.3.2 Gas-fired generation 27
• 1.3.3 Hydro 28
• 1.3.4 Wind and grid-scale solar 29
• Grid-scale solar 30
• Wind 31
• Curtailment 33
• 1.3.5 Renewables penetration 34
• Instantaneous renewable penetration and peak renewable output 34
• Renewable contribution to maximum demand 36
• 1.3.6 NEM emissions 36
• 1.3.7 Storage 37
• Batteries 37
• Pumped hydro 38
• 1.3.8 Demand side flexibility 39
• 1.3.9 New grid connections 40
• 1.4 Inter-regional transfers 42
• 1.4.1 Inter-regional settlement residue 44
• 1.5 Frequency control ancillary services 45
• 1.6 Power system management 48
• 1.6.1 South Australian system security directions 48
• 2 Gas market dynamics 50
• 2.1 Wholesale gas prices 50
• 2.1.1 International energy prices 52
• 2.2 Gas demand 54
• 2.2.1 Gas-fired generation 55
• 2.3 Gas supply 56
• 2.3.1 Gas production 56
• 2.3.2 Longford production and capacity 57
• 2.3.3 Gas storage 58
• 2.3.4 East Coast Gas System Risk or Threat Notice 59
• 2.4 Pipeline flows 59
• 2.4.1 Queensland Gas Pipeline Supply Interruption 61
• 2.5 Gas Supply Hub GSH 61
• 2.6 Pipeline capacity trading and day ahead auction 62
• 2.7 Gas Western Australia 62
• 2.7.1 Gas consumption 62
• 2.7.2 Gas production 63
• 2.7.3 Storage facility behaviour 64
• 3 WEM market dynamics 65
• 3.1 Weather observations and electricity demand 65
• 3.1.1 Morning average operational demand peak exceeding evening peak 66
• 3.2 Electricity generation 67
• 3.2.1 Change in fuel mix 67
• 3.2.2 Renewable penetration 68
• 3.3 Short Term Energy Market 69
• 3.4 WEM Real-Time Market prices 70
• 3.4.1 Real-Time Market price dynamics 70
• 3.4.2 Essential System Services ESS costs 71
• 3.4.3 Impact of May 2024 rule change 72
• 3.4.4 FCESS uplift share costs 72
• 3.4.5 Real-Time Market costs 73
• 4 Reforms delivered 75
• Abbreviations 83