Power prices surged when Liddell closed down

afr.com:

Wholesale power prices increased in the second quarter, partly due to the closure of AGL Energy’s Liddell coal-fired power station in April, according to the latest report from the Australian Energy Regulator.

While average electricity prices spiked across the National Electricity Market – ranging from $65 per megawatt hour in Tasmania to $148 in NSW – they were still below prices in the chaotic second quarter of 2022, where the market operator was forced tointervene to guarantee supply to keep the lights on.

The closure of the Liddell coal-fired power station in April helped pushed up prices in the second quarter. Janie Barrett

The AER quarterly update found higher seasonal demand in southern states, the seasonal decline in solar generation and reduced cheap coal capacity offered in Queensland and NSW were other reasons for the increase in prices in the second quarter.

The long-flagged exit of the 50-year-old Liddell coal power station – which in its final years typically offered 800 megawatts of capacity into the market, most of which was priced at $0 per megawatt hour – contributed to higher prices, the report found.

“Had Liddell’s capacity still been available, prices would have been lower,” it said.

But the loss of Liddell’s capacity was partly offset by about 1100 megawatts of new solar, wind and battery capacity coming online in the same quarter.

There was also more competitively priced coal-fired capacity offered into the market in the first half of this year, compared with last year, with fewer units offline.

While future electricity prices are expected to fall in the third quarter of this year, they are expected to increase again in the first half of 2024, according to the AER.

This was due to the late return