Record lows in electricity demand have been tied to this year’s mild winter temperatures, according to the Australian Energy Regulator (AER).
Demand fell to its lowest-ever level in the July to September period, with average electricity prices falling in “all regions” from the previous quarter.
A rooftop solar panel boom is also easing pressure on the grid.to September period, with average electricity prices falling in “all regions” from the previous quarter.
Every Australian jurisdiction except WA and the NT gets power from the National Electricity Market, a wholesale generator.
That system connects power producers (coal, gas, and renewable) to users (households and businesses), often with an energy retailer in between.
Last winter, the energy system struggled and electricity bills rose, due to a combination of global gas shortages, failing coal plants, and insufficient renewable capacity.
According to the AER, power demand typically spikes in the winter months “due to increased demand for heating”.
However, it found less power was used in July to September than the same time last year.
During this time, average demand for gas and electricity was “much lower” across the grid, with NSW, Vic and SA reporting record low demand.
AER said lower demand was “largely due to warmer than average temperatures” for the quarter.
The national mean temperature for winter was around 1.5°C above the 1961–1990 average, making it “Australia’s warmest winter since 1996,” according to the Bureau of Meteorology.
However, energy supply is projected to face increased pressure this summer, with many predicted to turn to air-conditioning to keep cool in hot El Niño temperatures. Increased electricity usage could lead to blackouts in parts of the country.
Solar power also contributed to the reduced demand on the grid, with record high output from rooftop solar panels. Rooftop solar power increased by 41% from September 2022 to September 2023. AER warned despite this new capacity, “more is needed” to support the transition to renewable energy.
Wholesale electricity prices from July to September dropped by over 50% from the same time last year, meaning electricity generators (the wholesalers) are selling power to retailers (e.g. AGL or EnergyAustralia) for a cheaper price.
However, it doesn’t mean savings will be passed on to customers straight away.
Supply issues from the transition to renewables have been projected to drive up prices over the next decade.