Bite-sized report: AEMO Energy Market Update Q4 2024

The latest Energy Market Update from the Australian Energy Market Operator (AEMO) captures a season of progress and disruption: renewables were up, demand was up, and emissions were down.

Each quarter AEMO releases its review of the energy market, including what’s driving energy prices in the National Electricity Market (NEM), Wholesale Electricity Markets (WEM) and East Coast gas markets.

The Q4 2024 Quarterly Energy Dynamics report evaluates energy market conditions from October to December.

AEMO CEO Daniel Westerman summed it up: "Australia recorded record renewable energy output of 46% of energy consumed in the NEM for the 4QCY2024, and record low output from coal-fired generation at <50% of total generation."

All time highs and lows

The key takeaways were:

• 20 new projects gained application approval, 11 registered, and 4 reached full output.
• Renewables surpassed 46% of total generation, peaking at 75.6% on 6 November 2024.
• Emissions hit an all-time low of 24.9 MtCO2-e.
• Distributed photovoltaic (PV) output reached a record high of 4,054 MW on average - an 18% increase from Q4 2023.
• Demand reached a record high of 23,737 MW - an increase of 2.4% year-over-year, driven by higher temperatures and electrification.
• Coal availability dropped to an all-time low, with black coal generation dropping 6.5%, and brown coal-fired down 9.2%.

Solar projects led registrations in the December quarter. Wind projects were the second-largest registration cohort, and battery projects were the third-largest. Existing facility upgrades were the fourth-largest registration.

Grid-scale batteries on the National Electricity Market (NEM) earned an estimated AU$69.5 million in Q4 2024.

NEM wholesale spot prices averaged $88/MWh - an 83% increase year-over-year but 26% lower than Q3 2024. New South Wales ($143/MWh) and Queensland ($127/MWh) hit Q4 record highs.

[AEMO Quarterly Energy Dynamics - Q4 2024, Figure 11 NEM average wholesale spot price increased year-on-year, but declined from the previous quarter]

Average electricity and gas prices were higher than the same period in 2023.

There was a record high of negative and zero prices - these occurred in 23% of intervals.

The NEM experienced minimum demand records across the NEM and in Queensland, New South Wales, South Australia, and Tasmania.

Increased battery storage in Western Australia helped the state hit a new quarterly average renewable contribution record of 46.4% and a renewable energy peak of 85.1%.

Half way to 2030 targets

Violette Mouchaileh, AEMO executive general manager – reform delivery, wrote: “The rise in rooftop solar output, coupled with record low coal-generation availability, resulted in coal-fired generation contributing less than 50% of the NEM’s total generation for the first time.”

This remarkable milestone means Australia is more than halfway to Energy and Climate Minister Chris Bowen's ambitious target of 82% renewables by 2030.

“Recent operating conditions highlight the role new transmission projects underway – such as VNI West, Project EnergyConnect and HumeLink – will play in sharing the lowest-cost energy throughout the NEM,” Mouchaileh said.

The target is in sight as the planning, regulations, and firming infrastructure - Battery Energy Storage Systems (BESS), Demand Response Management (DRM), vehicle-to-grid (V2G), load shifting, and Virtual Power Plant (VPP) - are being put in place.

“We should be shouting about this,” commented Tim Buckley, director of energy transition think tank Climate Energy Finance.

“The massive energy system disruption is well underway, with BESS increasingly becoming the price setters in the NEM, even as capacity installs are set to grow many-fold over the next 12-18 months.

“Negative prices incentivise BESS and consumer behaviour shifts and V2G bidirectional charging… at unprecedented scale and duration!”

However, despite AEMO’s best efforts, Buckley said there is much more to be done.

“Daniel Westerman is doing his best to modernise AEMO's thinking and speed, but he is pushing uphill given the speed of change, the multitude of agendas of the various energy ministers plus the alphabet soup of AEMO, ACCC, AER, AEMC, CER and all the state-based energy authorities.”