Analysis shows spike in fossil fuel-dominated state’s wholesale spot price this year far eclipses that in SA in July 2016 which sparked calls for a national inquiry into renewable energy

This article is more than 3 years old

This article is more than 3 years old

Extreme price spikes in Queensland’s fossil fuel-dominated electricity market this year have far eclipsed those seen in South Australia last July, which sparked calls of a national inquiry into renewable energy and led the federal Coalition to call for a halt to state-based renewable energy targets.



Since the start of 2017, Queensland’s wholesale spot price for electricity has spiked above $13,000 per megawatt hour a total of 71 times, according to analysis by Dylan McConnell from the Climate & Energy College at the University of Melbourne.

Adding up the effects of the price spikes, McConnell found they cost wholesale purchasers (such as retailers and some large businesses) a total of just over $1bn.

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By comparison, in July 2016, South Australia’s wholesale price spiked above $13,000 per megawatt hour 32 times.

Meanwhile, as Queensland’s prices have repeatedly spiked this year, South Australia’s prices have gone above $13,000 only three times. NSW has seen 11 spikes above that mark this year.

The price spikes in Queensland were responsible for an increase in average wholesale prices of $160 per MWh, bringing them to $260 per MWh – roughly the same as the average price in South Australia in July last year.

If those prices were all passed on to consumers, it would have added $85 to energy bills in January. McConnell pointed out that far eclipses the cost of the renewable energy targets, which add an average of $63 to consumer bills for the entire year.

The vast majority of Queensland’s energy is supplied by coal and gas. In 2015, Queensland had just 4% of its supply coming from renewables, compared to South Australia which had 41%.

“Clearly these figures show that other dynamics like market concentration and gas prices are contributing to these price spikes and volatility, not the penetration of renewable energy,” McConnell said.

While the events in Queensland have not raised an eyebrow, the smaller volatility in South Australia last year hit the front page of newspapers around the country, with politicians and rightwing commentators blaming the state’s reliance on renewable energy, calling for a halt to renewable energy expansion.

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The push against renewables was supported by the coal lobby too, with the Minerals Council of Australia saying the reliance on renewables “exposed families and businesses to higher prices, supply instability and greater reliance on imported power”.

At the time, Labor’s spokesman for climate change and energy, Mark Butler, described the discussion around the electricity prices in South Australia as “extraordinary exploitation” and “a cocktail of exaggeration, hyperbole and downright misinformation”.

“This is a push … by interests that have nothing more or less than an ideological bent against renewable energy,” Butler said. “It’s a push that should not be underestimated and it’s a push that must be overtly challenged.”

The attempt to blame renewables for South Australia’s price volatility was quickly refuted by analysis showing the price spikes were caused by gas generators in the state that had extreme market power, and were able to game the system, gathering a $30.3m windfall as a result.

McConnell said these new figures support that analysis.