Senate Environment and Communications Legislation Committee, , 3:16:12 to 3:23:47
Officials report a 27% year-on-year decline in wholesale electricity prices, attributing the drop to increased battery storage and renewable energy penetration.
Topics: Energy prices, Energy storage, Renewable energy
Speakers: Brad Archer, Speaker 13, Michelle Ananda-Rajah, Unknown Speaker, Hon Tim Ayres
>> Uh thanks Chair. Just have some questions regarding um wholesale electricity prices and home batteries. Okay, good to go. Um, how have wholesale electricity prices come down year on year in the last four quarters and what has been the role of batteries and renewables in these outcomes?
Uh thank you for the question uh Senator. Um so we have seen uh in the national electricity market uh significant decline uh in average wholesale prices. Um, so when we compare um the September quarter uh this year um I was going to say with last year but just realized I'm now comparing them to um oh yeah so 27% sorry 27% decline uh from se September quarter last year to to this year. uh and that has been attributed um by the Australian energy market operator to uh a range of factors. Uh certainly um the increasing penetration into the market of both uh large scale and small scale batteries uh is playing a role. uh and as I think we discussed earlier um that is for example uh reducing uh demand in peak periods uh and that's flowing through to for example uh less gas generation um which tends to be higher cost and and and sets the market price uh in those peak uh in those peak periods. Uh and then just more generally uh we have seen uh an increased amount of renewable energy uh in the market uh as well. Uh so those are the sort of factors that have led to uh that decline.
>> Do you do you have any data on how much
Not sure I have a figure specific figure on gas. Uh just the one figure here perhaps um gas fired generation uh down 34% uh year on year uh and now at levels uh that haven't been seen uh since the year 2000.
Add to Mr. Archer's answer that September quarterly energy dynamics report that he referred to released just last week. It just goes to show the the change in the role that batteries are playing. So uh in in in the third quarter of 2026 uh on average the daily average charge during the middle of the day was 13.4 gawatt hours and then it was discharging 10.9 of that back into the peaks as Mr. Archer said driving down those those peak prices that feed into household and small business bills. The comparative figure so compared to 13.4 gawatt just 12 months ago that was 3.7 >> and um uh the 10.9 discharge into the peak 12 months ago was only 3.2. So that's um not only driving down the peaks, but it means that the solar that was, you know, economically curtailed because of negative prices 12 months ago, almost half of that is now being fed into the grid and used. So it's it's good for prices, but also good for us on progress to our, you know, renewable energy targets and encouraging new
>> the excess solar during the day and then discharging it in the evenings. Exactly.
Bringing down prices. So charging taking it from when we have an excess uh and putting it to where it is it is needed which is a um you know something we hoped to see but we're now really seeing that uh at a at a level we didn't expect to see so quickly.
>> Um how has the current default market offer helped reduce retail prices and could you please take us through what those results show, what this has meant for households and why this has
So the the default market offer um set by the Australian energy uh regulator um and again uh we saw that uh decline for 26 uh 27. Um the the rate of decline differed across uh the different NEM uh jurisdictions. Um and the AR uh attributed the lower DMO prices uh again to that role that that batteries are playing but also uh increased wind generation uh during evening peak periods uh some reduced volatility in wholesale spot markets uh and lower wholesale electricity contract prices. Um so default market offer sort of is reflected in the standing offers that retailers offer to to customers. uh probably around 8 to 10% of residential customers uh are on those standing offers uh with the remainder being on uh what we refer to as market offers. Uh and and those are typically uh set at a discount uh to the standing offers. So if the DMO is declining, you'd expect uh market offers uh to also be uh reflecting reflecting that. Um so when we look at uh for example uh the information that the AC uh had in its NEM uh inquiry uh report um we're sort of seeing quarterly electricity bills uh for residential customers uh sorry I've lost my uh lost my train of thought.
>> Could I jump jump in mentioning the benefit for households?
>> It's good. This is the culture of this department. Officials working together to look after each other.
>> Small businesses are also seeing like price price reduction. So it it differs across the jurisdictions as Merch said, but um for New South Wales uh price reductions between 9 and 11.3% for flat rate small business customers and 9.4 4 to 20.9% lower for time of use small business customers. In Southeast Queensland, uh businesses are seeing prices 10.4% lower for flat rate small business customers and 14% lower for those who've adopt time of use charging. And South Australia, you know, prices are 6.8% lower for flat rate small business and 12.1% lower for time of use uh small business. So, so those are are um are positive changes. uh as a result of you know the the greater use of wind and those um uh batteries moving power from uh the middle of the day to the
>> Do we have more time?