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Australia\u2019s rapid rollout of renewables and batteries has helped deliver a year of lower electricity prices, but top energy executives warn the grid remains precariously balanced while ageing coal-fired generators continue shutting down and the nation races to build their replacements.<\/p>\n
Wholesale electricity prices have plummeted to five-year seasonal lows in the past six months, delivering relief to hundreds of thousands of customers on basic retail plans whose bills have fallen by up to 10 per cent. Regulators have attributed the decline to record-breaking renewable energy generation and an unprecedented boom in battery installations, which has allowed more low-cost daytime energy to be stored and used after sunset, cutting reliance on fossil fuels in the evening peaks.<\/p>\n
However, industry leaders caution that this year\u2019s smooth performance has also been heavily bolstered by luck: milder-than-average winter weather has suppressed heating demand, while coal-fired power plants across Australia\u2019s eastern seaboard have suffered fewer unexpected breakdowns than usual.<\/p>\n
\u201cNot every winter will be this good,\u201d said Frank Calabria, chief executive of Origin Energy.<\/p>\n
Winter poses an increasingly difficult test for Australia\u2019s grid stability, due to sudden cold snaps sending heating demand surging just as fewer daylight hours reduce electricity output from solar panels.<\/p>\n
\u201cJust remember, you\u2019ve got a lot of coal coming out of the system and a lot of renewables that still need to be built, so we still see a lot of variability going forward,\u201d Calabria said.<\/p>\n
The warning comes as Australia\u2019s energy transition approaches a critical juncture. While giant coal-fired power stations still supply nearly 50 per cent of eastern Australia\u2019s electricity, their years left powering the grid are numbered. More than half of the remaining coal generators in the system are scheduled to close by 2035, as their old, emissions-intensive equipment becomes more costly to maintain and unreliable.<\/p>\n
The Australian Energy Market Operator (AEMO) and major electric companies insist that replacing those plants with wind and solar \u2013 backed up by batteries, pumped hydroelectric storage and gas-powered generation \u2013 is the cheapest way to maintain grid reliability, rather than forcing the extensions of facilities that can break down with no notice and cause huge price rises.<\/p>\n
As governments and companies pour billions of dollars into renewables and storage across Australia, propelling renewables to nearly half of the grid\u2019s energy mix for the first time, there are clear signs the transition is having a positive impact on prices.<\/p>\n
According to AEMO, wholesale electricity costs \u2013 what retailers pay generators before selling power to customers \u2013 fell 47 per cent year-on-year across eastern Australia in the June quarter \u2013 the lowest average for that period since 2020. Victoria led the drop, down 60 per cent to $56 a megawatt-hour. Renewables, batteries and household-level technologies were \u201cchanging demand patterns, supporting system reliability and increasing the amount of lower-cost energy available across the market\u201d, said AEMO general manager of policy Violette Mouchaileh.<\/p>\n
But AGL, the second-biggest energy provider, echoed Origin\u2019s warning that the market remains vulnerable and new projects must be delivered with greater urgency. AGL chief Damien Nicks said this year\u2019s milder weather had led to unusually soft market conditions, and coal fleet availability had been \u201cthe best it has been for a while\u201d.<\/p>\n
\u201cWhat I would say is the market is still finely balanced,\u201d Nicks said. \u201cRisk doesn\u2019t go away in this market, it just evolves over time.\u201d<\/p>\n
While solar panels and batteries are being rapidly deployed, the industry says more fast-response gas-fired power plants, known as \u201cpeakers\u201d, will be needed alongside them, despite being sources of greenhouse emissions, to play an infrequent but critical role during long stretches of low wind and sunlight, particularly during winter. Unlike grid-scale batteries, which exhaust their stored energy in only a few hours, gas plants can run for as long as they are needed.<\/p>\n
\u201cYou can\u2019t shift energy between seasons using batteries,\u201d Calabria said.<\/p>\n