In Australia, the month of January normally sees a spike in the average wholesale electricity prices. However, according to research from Cornwall Insight Australia, January bucked this historical trend with the price trending lower in the first month of 2021 across all states, building on the low-price outcomes in December 2020.
The below graph shows this trend.
George Wong, modelling consultant at Cornwall Insight Australia, said: “Compared to last January, the largest decrease in the monthly average price of $119.24 can be seen in Victoria. The high price from January last year is largely due to a separation event at the end of the month.
“At $23.73 in January 2021 for Victoria, it is, in fact, the lowest monthly average price since December 2012. Unsurprisingly, this price drop had a large impact on more expensive natural gas generation in Victoria.
“The largest decrease in natural gas generation percentage can be seen in Victoria, where it only accounted for 0.7% of the total generation in January 2021. In Victoria, the brown coal generation also saw a decrease in percentage share from 78.8% to 74.9%. In contrast, solar PV generation has increased from 1.5% to 2.9%, while wind generation increased from 11.2% to 16.3%.
“This is the same story for other states, with a low average monthly price driven by increased solar PV and wind generation. The consequence of which is a reduction in the share of fossil fuels in the generation mix.
“As noted by the QED, as the wholesale electricity prices has fallen, out-of-market costs to keep the system secure have also increased, with SA particularly seeing a 91% increase in out-of-market costs when comparing 2020 with 2019. AEMO expects four upcoming synchronous condensers will curb this trend by the middle of the year.”
Learn more about the study.