June quarter shows grid transition’s pitfalls, progress

Australia’s two main electricity grids added more renewables to the energy mix in the June quarter, but a familiar early winter freeze, wind drought and coal plant failure on the east coast set prices soaring and teeth on edge in late May and June.

Across the quarter, wind, solar and battery storage increased their share of generation relative to the same quarter last year in both the eastern states National Electricity Market (NEM) and Western Australia’s South West Interconnected System (SWIS).

Emissions were lower than in the same quarter last year in both markets too, pointing to slow but steady progress in the transition to cleaner energy.

And grid supply from big batteries soared — a sign of things to come as a huge pipeline of new storage comes online in the next few years.

Yet relative to the March quarter, prices, fossil fuel shares, emissions and “lack of reserve” notices increased — a reminder of how much further we must go to hit the Albanese government’s 2030 targets for renewables and emissions.

Thanks to OnlyFacts for the charts, based on Open Electricity data.

Winter freeze, ‘doldrums’ make for peakiest quarter

NEM prices and emissions typically peak in the April-to-June quarter, Victoria sheds its “lowest NEM price” status, and renewables’ share of the grid retreats from spring-summer highs.

(SWIS prices are not included in this section because they are not comparable, but SWIS emissions trace a similar pattern.)

This year's late autumn and early winter cold weather, the “doldrums” (wind drought) and a coal plant outage hit the NEM hard in June, and prices spiked in NSW, which recorded the highest average price, followed by Victoria and South Australia.

Average prices in June in NSW and Victoria exceeded $300 per megawatt hour and fell just shy of that mark in SA. Daily averages (second chart) topped $2300/MWh in those states during the fourth week of June.

Quarterly average prices were similar to last year’s June quarter, but stayed well below the notorious June 2022 quarter when a perfect storm of adversity triggered a NEM suspension.

Renewables' steady gains

Fossil fuels typically come into their own in the June quarter compared to the March quarter, as autumn flows into winter, the sun fades and wind goes up and down.

Just as typically, they retreat when compared to the previous June quarter. This year the retreat in the NEM was led by black coal, down 3.7 percentage points; gas retreated 0.9 percentage points and brown coal 0.8 percentage points.

Wind generation in the NEM showed the largest advance (3.3 percentage points), while utility solar and rooftop solar added 0.9 percentage point and 1.1 percentage points. Victoria enjoyed record high wind generation and the doldrums in one week.

In the SWIS, gas led fossil fuels' retreat (3.2 percentage points), coal added 1.0 percentage points and rooftop solar led the renewables advance (1.2 percentage points).

Enough to move the needle?

Sadly, this is not enough to get Australia’s transition to clean energy back on target.

The next charts show combined renewables were at a record high for a June quarter in the NEM and the SWIS, and combined fossil fuels were at a record low for the quarter.

But those trends not only need to keep going, they need to accelerate.

The electricity systems’ task is to deliver virtually all of Australia’s direct emissions reductions between now and 2030, by hitting 82 per cent renewables.

The NEM and the SWIS increased their renewables shares by three-fifths and four-fifths respectively over the last five years, but they need to more than double those shares in the next five years to score.

Joker?

No, but perhaps a Queen and a Jack. Emissions — the reason we wage the “energy wars” — continued to track lower in the June quarter. But they need to fall a lot faster.

Electricity generation is doing the heavy lifting towards Australia’s emissions task, because the rest of the economy — heavy industry and transport to agriculture — has barely begun.

Grid emissions have fallen about a sixth over the past five years, to about 144 million tonnes this year. Over the next five years, they must shrink by three-fifths to under 60 MTPA.

A chink of light: grid supply from big batteries surged more than threefold across the NEM and SWIS, as a huge wave of investment began to make its presence felt.

It was from a very low base, but big batteries and “hybrid” wind-battery and solar-battery projects now dominate the Australian Energy Market Operator’s 51 GW grid connections pipeline.

The government’s home battery subsidy is also reshaping the market — comparison site SolarQuotes processed tens of thousands of quotes ahead of Tuesday’s commencement.

Batteries can help grids balance the ups and downs of wind and solar energy, alleviate local constraints and make the most of our growing investments in clean energy.