Rooftop solar generation peaks as black-coal fired production hits record low, AEMO data shows

A rise in solar generation, coupled with favourable weather meant Australia has easily coped with the fall in output of black coal-produced electricity, AEMO’s latest data reveals.

The amount of electricity generated from solar hit a record high in the third quarter, as a rapid increase in installed capacity coincided with favourable weather to drive a fall of almost 70 per cent in average wholesale electricity ­prices.

The findings are a boost to Australian households and businesses that are desperate for some bill relief. Wholesale prices are the primary driving force behind how much electricity bills will rise in 2024.

The Australian Energy Market Operator said the wholesale spot electricity prices across the National Electricity Market averaged $63/MWh this quarter, 71 per cent lower than at the same time last year.

The fall was largely driven by warmer than average weather, which reduced demand for electricity and increased the output of solar generators.

Australian households have been installing solar at a rapid rate as they seek shelter from two years of consecutive price rises in excess of 20 per cent. AEMO said the output from solar totalled 2287MW, a record third quarter high.

The increase in solar generation is a fillip for the federal Labor government which is struggling to wean the country’s $2.5 trillion economy off its dependency on coal.

The increase in solar installations will intensify pressure on coal power plants and heighten the need to move quickly to install so-called firming capacity.

Coal generators – still the dominant source of electricity for Australia – are under sustained economic pressure as an influx of renewable energy generators sends the wholesale price – the cost of producing electricity – regularly in negative territory.

Coal generators are largely inflexible, running throughout the day, and while they can make losses during the day remain profitable through generating electricity after the sun has gone down.

Higher rooftop solar penetration will intensify losses for coal generators – and AEMO expects two-thirds of Australia’s traditional electricity providers to close within the next 10 years.

The decline in coal means Australia’s coal output is steadily falling, and AEMO said quarterly generation from black coal hit a record low in the third quarter after AGL Energy shuttered its Liddell coal power station.

Australia’s biggest electricity generator switched off the Hunter Valley power plant for good – a long forecast move – on April 28 after a half century of operations.

The decline of coal threatens to exacerbate Australia’s firming capacity shortfalls.

Solar and wind capacity is growing but industry experts worry about what will prop-up the grid when the sun sets or the wind is not blowing.

Gas is one solution, but supplies across Australia’s east coast gas market are rapidly dwindling as traditional sources slow.

ExxonMobil – one of Australia’s largest producers of domestic gas – this year said its Gippsland Basin joint venture, which historically supplies more than 70 per cent of southeast Australia’s domestic gas demand, was rapidly dwindling. It said the number of producing wells had shrunk from 122 in 2010 to 68, and would drop to 36 by winter 2024.

Gas developers are struggling to secure approvals for new developments, indicating Australia’s east coast will have to either develop large-scale batteries or import LNG from WA or the NT.

Batteries remain prohibitively expensive, while pumped hydro can take many years to establish – limiting Australia’s firming capacity.

In the immediate future, however, gas shapes as a critical safety blanket with an El Nino weather system set to strain Australia’s ­energy grid. If coal power stations suffer outages, gas generators could run all day, upping a role that typically sees them produce electricity only during peak demand periods.