Skip to main content

Bloomberg ($):

Solar and wind power are continuing to set records in Australia, pushing down electricity prices and reducing the profitability of fossil fuel generation.

Wind last year overtook natural gas in power generation for the first time, and together with solar helped cut wholesale prices to their lowest since 2015, the Australian Energy Regulator said Friday in its annual State of the Energy Market report. A record 2.5 gigawatts of rooftop solar entered the National Electricity Market, which covers most of the nation, further eroding the margins of fossil fuel plants.

“When rooftop solar PV generation is high in the middle of the day, the demand for electricity from the grid falls significantly,” AER said. “This phenomenon drives down prices at these times, challenging the economics and operating capability of coal fired generators, which are not engineered to run at low levels of output.”

About 27% of buildings in Australia had solar systems on their roofs at the end of 2020, the highest proportion in the world, according to figures from BNEF. The high uptake led to a record 3,662 instances of negative prices in the NEM, according to Friday’s report. 

[Rob Verdonck]

More: Australia’s Case for Fossil Fuels Weakens as Solar and Wind Set Records

Join our newsletter

Keep up to date with all the latest from IEEFA